Research On IPO’S Ultra-Raised Phenomenon Of GEM Listed Companies Of China

Growth Enterprises Market (GEM) of China was firstly set up in Shenzhen StockExchange on October30,2009. Since the establishment, GEM had been confronted with manyproblems, especially “three highs” which is composed of high issue price, high ultra-raisedratio of money, high price-earnings ratio. Up to December2011, there were282companieslisting on GEM. It is expected to raise68.253billion yuan. But the actual sum is183.281billionyuan. The total sum of extra capital is115.028billion. So the averaged extra capital each listedcompany is408million yuan. The averaged ultra-raised ratio is172.66%and the averagedprice-earnings ratio reaches to60.46times as much.For medium-sized and small enterprises, which are just listed and the development ofwhich is not mature, a huge strain is put by the huge extra capital. If it is used unreasonably, itnot only has negative effects on the business management and development of companies butadverse to efficient allocation of social resources and stable development of GEM. At present,the efficiency of the use of extra capital of GEM listed companies is very low. Most of the fundis used to repay bank loans, increase circulating fund, expand companies, purchase houseproperties and even get the interest for being deposited into the bank. Therefore, how to solvethe problem of ultra-raised and make full use of the extra capital is increasingly becoming apressing issue today.So the paper does the systematic research on the current circumstance of ultra-raised fromsuch aspects as ultra raised ratio of money, price-earnings ratio,the relationship of ultra-raisedphenomenon and underpricing phenomenon. Besides, the paper takes282companies, whichwere listed on GEM by the end of December2011, as the research sample and the duration fromOctober2009to December2011as the research period. Next,The paper analyses whyultra-raised phenomenon occurs from such aspects as listing requirements of GEM, IPOissuance inquiry system, delisting system, the sponsor, the publisher and Investor. And thepaper believes that ultra-raised phenomenon wastes social resources, adverse to stabledevelopment of the securities market, causes brain drain, brings business risk and damages theinterests of investors. Finally, the paper not only discusses how to solve the ultra-raisedphenomenon but also makes suggestions on the management of extra capital. this paperbelieves that in order to solve the ultra-raised problem must start with the relevant system,andstrengthen the supervision of the relevant agencies,accelerate the expansion of GEM, andenhance investor education。...