An Empirical Study Of The Capital Structure And Enterprise Performance Of The Companies Listed On GEM In China

October31,2009,28companies who had passed through the audit, became thefirst batch of stocks traded on the Shenzhen Stock Exchange. Therefore GEM openedon our planning for years. GEM provides SEMs with a platform for direct financingin China, which had broken the imbalance of indirect financing before mainly relyingon bank loans, and it had improved the financing channels and capital structure ofenterprises. The changes in the capital structure had determined the company’s cost ofcapital, and led to changes in the value of the company. The optimization of thecapital structure helps to improve enterprise efficiency. Many of the listed companiesafter joined in GEM are thriving enterprise efficiency. However, with thedevelopment of the time, there are some companies appearing signs of varyingdegrees of decline in performance. GEM was originally designed to improve thefinancing environment for SMEs, to optimize the capital structure and to enhancecorporate performance. But why the fate of the enterprise s in the GEM List would becompletely different? Currently, there are many researches about GEM, but mostconcentrated in issues such as the trading system, the "three high" phenomenon; whilethe research is still in the blank on the capital structure and corporate performance ofcompanies listed on GEM. Therefore, the author selected research directions in “thecapital structure of the companies listed on GEM and the business performance ", andfocused on analysis of the mechanism and mutual relations between China’s GEMlisted companies’ capital structure and corporate performa nce. Selected63fullyannouncement of the first quarter of2010to mid-2012，totally five quarterly reports,three semi-annual reports and two annual reports of companies listed on GEM, as theresearch object, using a panel data model, an empirical researc h; In the end, to helpthe companies listed on GEM enhance the level of profitability, the author listedseveral policy recommendations.This paper is divided into five chapters.The first chapter is an introduction. Firstly it introduced the background andsignificance of the topics, followed by the domestic and foreign literature. And then itis research ideas and methods. Finally it pointed out that the innovation of this paper,and there may be inadequacies.Theoretically to proven the mechanism between the corporate capital structureand performance is the premise and foundation for the study. Therefore, in the secondchapter, this article listed three very representative theoretical results of the capitalstructure. The sub-section in turn introduced the traditional capital structure theory,modern capital structure theory and postmodern theory of capital structure. And then it discussed the evaluation system of enterprise performance.In the third chapter, this article explored the status quo of company’s capitalstructure and corporate performance listed on China’s GEM. First of all, from thegeneral it outlined the current status of domestic companies listed on GEM; Then, it isthe analysis of the status quo of companies listed on GEM and enterprisesperformance.The fourth chapter is the most important part of this article. First of all, based onthe foregoing analysis, this proposed three underlying assumptions; Secondly, therelevant variables are defined; then to build mathematical models and empiricalanalysis; Finally, a detailed analysis of the experimental results.The fifth chapter derived two conclusions after analysis:1. The businessperformance of companies listed on GEM with increasing asset-liability ratioincreases firstly. After reaching a critical value (0.5515), it would decline with theincrease in the rate of balance. That is to say there is an optimal liabilities interval.2,there is a negative relationship between our business performance and short-term debtratio of companies listed on GEM. In this regard, this article finally proposed afive-point policy recommendation.