Study On Ipo Excess-raised Phenomenon Of GEM

For the purpose of building multi-level capital markets and expanding financing channels for small and medium-sized enterprises and high-tech companies, the Growth Enterprise Market was officially launched in October2009in China. As of December31,2011, a total of281listed companies were successfully landed on GEM, the total funds raised amounted to195.89billion Yuan. The rapid development of the GEM contributed a lot to the development of small and medium-sized enterprises and high-tech industries in China. Although having made remarkable achievements, the GEM also reveals many problems. According to the data, since opening the board, GEM has three big problems:high issue price, high price-earnings ratio and high excess funds raised ratio, especially the excess funds raised ratio is much higher than the main board market, which brings high risk for GEM future healthy development. Huge excess funds raised makes not only the funding-raising plan which is written in the prospectus before the IPO by the listed companies to flow at the form, but also regulatory prospectus review and analysis of investor to lose its meaning. At the same time, some listed companies used exceed raise funds to purchase houses or land, or even the financial products; some listed companies put large sums raised funds in banks, which reduces the efficiency in the use of funds; even some listed companies keep the use of raised capital unknown, which brings many hidden dangers for the companies’ main business and the interests of investors, and even affect the long-term stable and healthy development of the GEM. Under this background, by analyzing the status of China GEM excess raised, this paper found out some important factors which mattered a lot on the GEM excess funds raised, and pointed out some hidden dangers that it may arise. Later, as reducing the excess funds raised, the paper proposed some policy suggestions, aiming to improve the IPO pricing efficiency and prompt the IPO price more reasonable. In addition, as a large number of raised funds are used for no purpose, the paper also put forward some measures which could strengthen regulatory on the use of the excess funds raised, ensuring the efficiency and providing some reference to the government, listed companies and investors.The paper is divided into six chapters. The first chapter is the Introduction, which introduced briefly research background and significance, literature review, research methods and research ideas, research framework, the innovation and limitation of the paper and the future research direction. The second chapter is Theoretical Basis which is an overview of the papers related to theoretical foundation-theories of IPO pricing efficiency, including the information asymmetry hypothesis, the information symmetry hypothesis and the behavioral finance hypothesis. The third chapter is Background Analysis of the GEM in China, which is a brief introduction of the background of the establishment, history, pricing system and current situation of GEM in China. The fourth chapter is current situation of the GEM excess funds raised in China, which analyzed the GEM excess offering status respectively from the excess funds raised amount, ratio, the first excess offering price-earnings ratio and other aspects. The fifth chapter is the Empirical Analysis of the Influence Factors of the GEM Excess Funds Raised in China. On the basis of analyzing the causes of the phenomenon of excess-raised, this chapter chose281listed companies as the sample, combining the related theories and the characteristics of the GEM, selected12factors which may influence the GEM excess funds raised in China, such as industry, state-owned capital, firm size and so on, and then found out the main factors through Eviews6.0. The sixth chapter is the Hidden Dangers of the GEM Excess Funds Raised in China and Countermeasures. After summarizing excess funds flow, this chapter analyzed some hidden dangers that may arise, and proposed some countermeasures and suggestions how to reduce the harm of the excess-raised.Based on the descriptive statistical analysis of the281companies IPO data, the paper found that the underwriting companies with high reputation can raise more funds than those with low reputation; companies with good business performance can attract more attention of investors and raise more funds; the company equity structure had something to do with the excess funds raised ratio. Based on the analysis of the multiple linear regression model, the paper found that there is a negative correlation between excess funds raised ratio and listed companies’operating period, first shareholder ratio, venture capital, the prosperity index of secondary market and the industry, and there is a positive relation between the excess funds raised ratio and state-owned shares, the total assets and net assets income rate of the companies in the year before listed, the reputation of the underwriter, the industrial added value monthly growth rate, as well as the IPO underpricing rate on the month before listed.In general, the longer the period of investigation is, the more reliable and more accurate conclusion is. However, because the GEM market set up so late in China, inspection time is short and the sample size is small, which turn out that conclusions of the paper may have some defects, and it needs to work hard in the follow-up studies.