An Empirical Study Of IPO Effect In The Listed Companies Of Shenzhen GEM Board

“IPO Effect” has been studied since1990s, it refers to the decline of operationalperformances of companies after IPO. Domestic and foreign scholars have proved thatmany stock markets include Europe and America mature markets and Asian emergingmarket and China’s main board and SME board exist the “IPO Effect” generally, andthey analyze the influencing factors from multi-angles. Since Shenzhen GEM Boardhas been operating just for about4years, related studies on this field are scarce.Integrated with the relevant theoretical explanation and characteristic of GEMboard, this paper selects153companies which have IPO on GEM board in2009and2010as samples, and design the research hypothesis considering theory and practice,on which we examine the existence of the "IPO Effect" and explore the influencingfactors of "IPO Effect" of GEM Board by regression model.We examine the existenceof "IPO Effect" by designing an evaluation index system and compare performancesbefore and after IPO, and we find that GEM board do exists the IPO Effect too, andthat the financial indicators of grow ability and profitability and operational capacitymostly decline significantly in both whole samples and the group samples. On groupsamples, we find that performances with VC/PE background or non-state-ownedbackground or existing separation of two rights of ultimate owner are on averageworse than the samples with opposite attribute generally. After factor analysis andpre-IPO earnings quality measure and regression analysis, we find that VC/PEbackground and existing separation of two rights and extent of earnings managementbefore IPO are three significant negative factors to performance Changes ofcompanies before and after IPO; And the state-owned background is the significantpositive factor to that.This4main influencing factors can explain the "IPO Effect" ofGEM board to some extent.At last, five suggestions are given according to the conclusion: enhance thesupervision and accelerate the delisting provision mechanism, extend the lock-upperiod of VC/PE, advocate state-capital entering to high-tech industries, improve thelevel of large shareholder governance, strengthen management of IPO raised project.