Gem Companies R&d Research Effects On Growth

China’s Growth Enterprise Market (GEM) is developing fast since launched in2009and it has attracted153companies till December31th,2010. The high growth of GEM-listed companies is highly valued by the stakeholders. Whether the Research and Development (R&D) investments will affect the growth of GEM-listed companies is a hot point in nowadays. This paper gives a detail analysis to how a company’s R&D investments influence the company’s growth after making a deep survey of current research concerning GEM and a considerable study of the GEM companies’features.This paper takes six estimation values (profitability, shareholder’s profitability, operating capacity, debt paying ability, cash flow ability and development capability) and another twelve financial indexes to evaluate the growth of GEM-listed companies, and then applies the Principle Component Analysis (PCA) to quantize the growth, which is the dependent variable in this paper. At the same time, it chooses the material investments and talent resources as the major estimation indexes of the GEM-listed companies, combined with four independent variables (the R&D strength, the income and contribution proportion of technical staffs, the percentage of technical staffs, the percentage of staffs with a bachelor’s degree or above). It uses the liner regression analysis method together with relative data from2008to2010of GEM-listed companies to estimate the impact of R&D investment strength on a company’s growth. The result shows that the R&D strength of the second last year has the biggest influence over a company’s growth, while the R&D strength of the past year has less influence and the R&D strength of current year has the least influence. In addition, the results also indicate that the income and contribution proportion of technical staffs has an observable impact on the company’s growth. The percentage of technical staffs and well-educated workers with a bachelor’s degree or above have no obvious contribution to the company’s growth, but the correlation coefficient between these two indexes and the company’s growth is positive. At last this paper gives some practical policies and suggestions based on the research results to GEM-listed companies.