The Research For The Profit Issues Of Over-Raised Funds Of Gem Listed Companies In China

On October30th,2009, the GEM came to the stage of the A Share Market in China. The establishment of the GEM not only aimed to solve the problem of shortage of capital for small and medium-sized companies, but also to improve the capital allocation efficiency in China Capital Market. However, the real situation of the GEM is far from public satisfactory, the proportion of the over-raised funds is far higher than the main board and small caps in the market. As of August26th,2012, there are349listed companies in financing the growth enterprise market. Super funds raised phenomenon appeared in more than341companies, it shows that utilization of funds have declined and the over-raised funds have been a huge waste to the whole capital market, damaging the optimization of the capital allocation, so more attention should be paid to the utilization of funds collected and the over-raised funds.Enterprise’s initial public fundraising in an IPO is supposed to be a significant representation for stock market in playing an optimal allocation of resources. However, the problem of over-funds in China’s capital market is more serious. The utilization of funds has declined and the over-raised funds have been a huge waste to the whole capital market. This not only hurts the interests of creditors and minority shareholders, but also crushes the enthusiasm of investor, the interests of listed companies are finally effected. Because of the lack of the efficient data and the application of theories, most of the researches on excessive-raised funds of listed companies in GEM failed to have a deep analysis of the excessive-funding problem. So the advices carried out in these articles are often not at point and unable to solve and improve the problem.This article innovatively applies the capital allocation and the company investment and financing theory and analyses the characteristic of over-raised funds of listed company in GEM and quantities of over-raised funds, getting the record of them. By using regression analysis, this article tested whether and how these factors contributed to the formation of excessive funds. Then we extended this model to different companies, to see how excessive funds will create loss between companies. In analyzing the influences, this article innovatively applies the capital allocation theory. By combing over-raised funds and the projects the company would like to invest, this article analyzes the capital waste and inefficiency capital allocation led by over-raised fund. This article firstly analyzes how excessive-raised funds influence the optimization of capital allocation efficiency of a company. Then we extended this model to different companies, to see how excessive funds will create loss between companies. Lastly, based on those models, this article analyzes the influence to the whole capital market.