An Empirical Study On The Financial Characteristics Of Emerging Companies And Their Determinants In China

The pattern of economic development in our country is turning from extensive to intensive and the emerging companies plays an important part in this process. The financial characteristics can reflect the financial condition and operating result of a company. Therefore, the research of financial characteristics can be helpful to understand the operating condition of a company. Moreover, in order to improve the operating condition of a company we need to know the influence factors of financial characteristics. Consequently we choose the listed companies in National Equities Exchange and Quotations as the sample of emerging companies, we also choose the listed companies in SME Board as the sample of mature companies. Then we research the financial characteristics and their influence factors in empirical ways. At last some suggestions are presented to improve the development of emerging companies.This paper mainly consists of five parts. In the first part we review the literature from the aspects of emerging companies, financial characteristics and influence factors of financial characteristics. Then we decide to research in the way of comparison and focus on ownership concentration, equity balance degree and company growth. In the second part we define the emerging companies and analyze the basic characteristics of emerging companies. In the third part we propose hypotheses from the aspects of profitability, quality of profits, operating efficiency and capital structure, which are on the basis of theory in corporate governance. In the fourth part we verify hypotheses in the way of t-test and multiple linear regressions. In the fifth part we propose our suggestions on the development of emerging companies, which are based on the empirical conclusion.By the empirical research of listed companies in NEEQ and SME Board in2012, we can get the following conclusions.The first aspect is about the characteristics. Firstly, although the return of owners’equity is significantly higher than the mature companies, their quality of profits is much worse. Secondly, both the total assets turnover and the fixed assets turnover of emerging companies are significantly faster than mature companies. Thirdly, in the emerging companies the proportion of debt in the total capital is significantly higher than that of mature companies. Therefore, both the fast turnover speed of fixed assets and financial leverage contribute to the high ROE of emerging companies.The second aspect is about the influence factors of financial characteristics. Firstly, ownership concentration and the profitability present the U relations significantly, while ownership concentration and asset-liability ratio present the inverted U relations, which is not significant in emerging companies. Secondly, in mature companies equity balance degree is significantly positive correlated with profitability and quality of profits, while it is significantly negative correlated with asset-liability ratio. However in the model of emerging companies the coefficients of equity balance degree are not statistically significant. Thirdly, the growth and profitability present significantly positive correlation, while it presents significantly negative correlation with quality of profits.To some extent the conclusions of this paper can prove that the multi-level capital market has achieved hierarchy on the basis of risk. When the Shanghai Stock Exchange decides to build strategic emerging industry board in the future, the financial characteristics of emerging companies should be taken into consideration. In addition, we need to improve the development of emerging companies from the aspects of ownership concentration, equity balance degree, company growth and operating efficiency, so that the emerging companies can contribute more to our economy.