A Study On The Factors Affecting The Relationship Between Excessive Raised Funds And Business Performance Of The GEM Listed Companies

Since Chinese growth enterprise market opened in 2009, there have been 484 listed companies in the six years, to provide small and medium enterprises with more financing methods. At the same time, as an important part of the multi-level capital market, it is also an significant tool of adjusting the Chinese industrial structure and promoting financial and economic reform. Although the growth enterprise market(GEM) has made some achievements, owing to emerging market and starting late, excessive raised funds and post-IPO performance decline have aroused wide public concern. Excessive raised funds have a negative impact on the company’s performance; While reduced performance further intensify the IPO’s risk of companies that exist problem of excessive raised funds, which will have a huge negative impact undoubtedly in the long-term development of China’s growth enterprise market. Therefore, it is necessary to make a deeply research about the relationship between the two phenomenon.First of all, this paper reviews domestic and foreign literatures about excessive raised funds and business performance. the theory and current situation of excessive raised funds and business performance are sorted and analyzed, and make some research as follows on the basis of the study. this paper selects 355 listed companies as samples. These companies are assorted into high, medium and low level on the basis of raised funds rate, and do descriptive statistics in each group of the company’s profit ability, debt paying ability, operating ability and growth ability, to measure different raised funds rates companies operating performance, found a downward trend. Doing multiple regression analysis about influencing factors of operating performance which include ownership concentration, the proportion of independent directors, management stock incentive and venture capital participation. Based on these factors regression and testing to determine their impact on the business performance and the impact extent of each raised funds rate group. Empirical results show that ownership concentration was positively correlated with business performance, venture capital participation was negatively correlated with business performance, the proportion of independent directors and management stock incentive wasn’t correlated conspicuously with business performance. We also found that regression results in the companies of low raised funds rates verify the theoretical hypothesis these four factors. According to research results, we make some recommendations as effectively as possible from market system, companies regulation, corporate governance and venture capital firms. It would regulate the use of raised funds, avoid the risk of post-IPO performance decline for inventors, make GEM become a effective method to finance for innovative enterprises.