Research On The Using Efficiency Of The Listed Companies’ Initial Public Offerings Funding-raise Of Growth Enterprises Market Board In China

GEM (Growth Enterprises Market) board in China has aroused widespread concern in theindustry since it opened in2009, and the using efficiency of IPO (initial public offerings) funds raised bythese companies became the focus. The purpose of setting up the GEM is to help the corporate at the earlystage of growth or smaller companies to solve the difficulty of raising money. It can help to allocate fundsin the capital market rationally and use funds more reasonably and create more benefits for enterprises, soas to improve the efficiency of the funds allocation in the capital market. However, the phenomenon ofexcessive IPO financing of our companies listed on GEM is very serious. Investors whose enthusiasm isabnormally high invest GEM market blindly, resulting that the scale of the listed company’s IPO raisingfunds exceeded expectations far. Huge amounts of raised money allows listed companies variousinvestment direction, at the same time the phenomenon of changing investment direction and using raisedmoney to pay bank loans is exposed, even some companies let large amounts of raising money lie idle inthe fund-raising account of the bank. The raised GEM funds have not been effectively utilized, which iscontrary to the purpose of the establishment of GEM. It causes the inefficient use of the raised funds andbrings the decline in performance of listed companies.From the perspective of capital allocation in the capital markets, the general equity financingtheory is presented, and related policies and regulations about the funds-raising management in our GEMmarkets are summed up. Based on the statistical analysis and combining the operating performance oflisted companies, how the using efficiency is influenced by the excessive financing and the using directionsof the raised funds is examined. The empirical research shows that, all else being equal, the higher the IPOover raising rate, the worse the enterprise operating performance, the lower the funds using efficiency, sothere is a negative correlation between the over funds-raising rate and funds-using efficiency. In addition,the investment directions of the raised funds are researched in this paper, and it shows that differentinvestment directions have a significant effect on the funds-using efficiency. The higher the ratio of the IPOis invested in the primary industry, the higher the funds-using efficiency, which means there is a positivecorrelation between investment in primary industry and funds-using efficiency. Meanwhile, if the raised funds are used in foreign equity investment, to repay bank loans or lie idle in the fund-raising account ofthe bank, the funds-using efficiency will decline, so the relationship between them is a negative correlation.The research of the IPO funds-using efficiency of GEM listed companies can give an evaluationof the GEM capital allocation efficiency, and avoid investors damaging their own interests for their blindinvest enthusiasm, and reduce their investment risks. The research of how investment of the listedcompanies’ IPO funds influences economic benefits can help listed companies use raised funds moreseriously. From their own interests, the listed companies allocate funds rationally according to related lawsso as to avoid short-term investment, improve the funds-using efficiency and bring the enterprise long-termstability and sustainable development, at the same time it can also provide reference for the follow-onfinancing. The improving of the funds using efficiency can make the funds in the GEM capital market beallocated more rationally, avoid the money waste and loss, improve the capital structure of the wholecapital market and benefits the optimal allocation of the capital in the capital market and the sustainabledevelopment of the society.