Analysing On The Financing Decisions In GEM Board

GEM board is a new capital market for small and medium high-tech enterprises to raise capital, the paper analyzes the financing conditions of companies listed in GEM board, reveals the main factors that impact on the financing structure of companies listed in GEM, on the one hand,it Provide some guidance to correctly identified GEM board role; the other hand, it can reveal the main factors that contribute to financing in GEM board in equity. Specifically, the paper made an analysis on the financing structure before the companies listed in the GEM board equity and found that financing in GEM board is an important and necessary way for companies listed in GEM board. Its necessity and importance of equity financing is determined by the characteristics of the companies. Based on the analysis on characteristics and features of the companies and the specific mechanism that they influencing financing structure, the article put forward relevant hypothesis.To test these hypotheses, this paper first selected55companies that listed in GEM board in the first half year in2010as a sample of the empirical analysis. The empirical results show that:the company’s innovation and profitability is to determine the financing structure of companies listed on GEM board, the company’s size, growth and development stage has no effects on the company’s financing structure. The results mean that at present China’s listed companies in GEM board has strong innovation and good profitability, innovation and good profitability are important factors for company to be listed in the GEM, The results also reflect effectiveness of the GEM board in allocation of resources and the matching between the market risk and return,it is important to encourage innovation-oriented role and to strengthen management to improve the level of profitability.Conclusions of this study has strong policy implications, first, to accelerate the development of GEM board is important to promote technological progress and industrial upgrading. Characteristics and features of small and medium sized technology enterprises decide that its financing process is also a risk-sharing mechanisms and risk transfer mechanisms, which can only be realized in the capital markets. Secondly, innovation and profitability of the company’s has significance impacts on financing structure and also shows the important factors that make company listed in the GEM board are innovation and profitability, therefore, enterprises should strengthen the innovation, so then can be recognized by the capital market and get rewarded, while enterprises should focus on improving profitability, strengthening management, to create the conditions for access to the GEM board. Finally, GEM board is a high risk market, but also a high-yield market, as investors should weigh the risk and return relationship.