Study On Over-raise Funds Of GEM’s Influence On Investment And Performance Of Listing Coporation

Over-raise of funds is China’s special phenomenon, which means listing corporations raise more money than they expose in IPO.There have been 406 companies listed successfully since the first appearance of GEM on August 30 th 2009. Most of them were over-raised to some extent. According to Wind, until GEM’s fifth anniversary on 23 rd August 2014,360 companies had 128.3 billion over-raise funds. The actual raised funds were 214.3 billion. While the plan was just 86 billion. The average company super-raise proportion was as high as 1.5 times. The super-raise is much more serious than main board market and small & medium-sized board stock market. The reason is that most companies in GEM are high growing. Investors have high anticipation and regard them with potential. Following enthusiasm pushes price too high.Over-raise of funds has a prolong influence on Chinese capital market. On one hand, it reduces effect of the allocation of capital resource and brings about unbalance. On the other hand, funds over-raise is far beyond companies’ prospect of capital usage, which can easily lead to capital surplus and abuse. Finally, it will influence the efficiency of investment, cut down companies’ value and invade investors’ interest as well. All in a word, there is theoretical and practical meaning to study GEM’s over-raise funds, as well as its impact on the efficiency of investment and EVA.This article summarizes the reasons and effects on companies of super-raise funds based on related documents, providing theories for research of China’s GEM. Besides, the article makes a statistical analysis of GEM’s super-raise funds, which includes the comparison of over-raise funds ranges from main board market to small & medium-sized board stock market and to GEM.Over-raise funds in different industries of GEM, use of super-raise funds are also involved. In this way, we can get an overall knowledge of over-raise funds in GEM. Next, with 240 listing companies from 2010 to 2011 as samples, and three years’ data as variables, the article makes an empirical research of GEM’s super-raise funds and varied levels of super-raise funds’ effect on listing companies’ investment and EVA. At last, the paper gives some advices to policies, listing companies and investors which result from current situation and empirical research. It aims at improving the efficiency of IPO pricing and supervision in order to not only rationalize the issue price but also constraint listing companies’ behaviors.