The Study Of The Capital Structure And Enterprise Value Of The Companies Listed On GEM In China

On October 30 2009, the GEM had passed through the audit on the Shenzhen Stock Exchange; it means that China’s capital market has entered into a new stage. GEM opens up SMEs with a new financing mode in China, which had broken the unfair of indirect financing including the relying of bank loans before, and it had improved the enterprises’ financing channels and the capital structure. The optimization of the capital structure has positive effect of the enterprise efficiency. Many of the listed companies after joined in GEM have thrived. However, with the passed time, there are some companies appearing signs of decline performance in different degrees. GEM was originally designed to meke the financing environment better, to make the capital structure more completed, and then enhance enterprise value. But why the GEM Listed enterprises’ fates are so different in the end? Currently, there are many researches about GEM, but mostly concentrated on the issues such as the trading policy and the "three high" phenomenon; while the research is less on the capital structure and enterprise value of companies listed on GEM.According to the above background, the paper proposes a study of “the capital structure of the companies listed on GEM and the enterprise value". Through empirical research, the paper focused on analysis of the mechanism and mutual relations between China’s GEM listed companies’ capital structure and enterprise value. Selected 281 fully announcement of the financial annual report of 2011 to 2013,totally three years reports of companies listed on GEM, as the research object, using a linear regression model, an empirical research. The paper has found that debt asset ratio and flow asset-liability ratio of GEM listed companies in China are negatively related with the enterprise value, liquidity ratio and shareholders’ equity/ fixed assets have positively influence with the enterprise value, liability with interest/ capital input doesn’t pass the significance test, and has a weak negative correlation with enterprise value. Finally, to help the companies listed on GEM enhance the level of management, optimizate the enterprise value and promote sustainable development, the author listed several policy recommendations.Results of the study for our GEM listed companies have great significance, not only optimize the capital structure, but also enhance corporate value. On the one hand, it can provide the company theoretical guidance from the choose of capital structure, financing decisions, to improve corporate governance structure, and then expansion capital structure theory system; On the other hand, it is very important to balance the companies’ own capital structure and enterprise value, and has a certain reference value of how to improve the capital structure best for the government and the market.