An Analysis Of The Utilization Of The Over-financing Capital Of The Listed Companies On The Growth Enterprise Market

Ever since Oct.30,2009when the Growth Enterprise Market was put into practice inShenzhen Stock Exchange,365companies had been listed on it by the end of2012. Because ofits prevalence in the market, over-financing has practically become an alternative name for theGrowth Enterprises Markets. Attentions have therefore been drawn to the market, listedcompanies and the investors. Over-financing may put greater pressure on the companies justlisted but not yet developed. The irrational use of the raised funds, will not only affect thecompany’s results of operations, but also waste resources and threaten the development of theGEM market.Based on the problem above, this paper analyzes356companies listed on GEM marketbefore the end of2012. Firstly, we analyze the raised funds in GEM market, and compare theuse of the raised funds and the earnings.Then, we compare the operating results of listedcompanies in different years and different boards. Above all, we empirically analyze the therelationship between ultra raise rates of GEM listed companies and their operating results. Theresults shows that the ultra raise rates and the operating results has a negative correlationrelation testifying that over-financing has negative effects on the listed companies and theinvestors. We also probe reasons for those effects, and find that the lack of clear use plan of theraised fund, the random use of funds, a lax oversight and not enough punishment are the mainelements. Finally, we foresees the general blueprint of over-financing in Growth EnterprisesMarket within our country and gives practical suggestions on the prevention of over-financing.