IPO Valuation Bubble,Corporate Governance And Executives' Resign And Cashing Out

It has been over five years since the launch of GEM.Whether from the number of listed companies,the scale of financing,or from the total market capitalization,the growth enterprises market has grown from strength to strength,and become an important part of the construction of multi-level capital market in China.Also,there are many billionaires arise since their companies have been listed on the growth enterprises market.However,along with all these billionaires arising,there is another phenomenon rising quietly.That is some executives begin to leave the company,and become more and more serious.The resigned executives contain directors,managers,supervisors,the secretary of the board,and even the founder of the company.The speculation of the cashing motivation of executives resigning causes heated debate.Based on the focus,this paper analyses the relation of executives' resign and cashing out,IPO Valuation Bubble and Corporate Governance through empirical research,find out the deep reason of executives' resign and cashing out,helps to promote the perfection of the institution and the healthy development of the growth enterprises market.Firstly,review the domestic and foreign literature in two aspects,which contain the company valuation and corporate governance;expounds the basic system of the GEM,the relevant laws and regulations as well as the supervision of the news media and the public;analysis the problem of executives' resign and cashing out with Principal-Agent Theory and Behavioral Economics Theory.Secondly,based on the detailed description of the whole situation and characteristics of the GEM and the present status of executives'resign and cashing out,we choose the companies which listing on China GEM and occurring executive resignation from April 21,2010 to October 9,2012 as the study sample;establish Logit Regression Model to test the impact of IPO valuation bubble and corporate governance on the behavior of executives' resign and cashing out.Further,according to the different level of corporate governance,we divide the study sample into two groups,and compare the different relationship of IPO valuation bubble and executives' resign and cashing out between high corporate governance group and low corporate governance group.Finally,we propose the policy recommendations for further curbing the desires of the executives in GEM companies to resign and cash out and improving the healthy development of the GEM,including learn from foreign experience to promote the healthy and stable development of capital markets,extend the period of restricted shares and construct the mechanism of legal liability,reform the GEM Initial Public Offering System and improve the internal corporate governance.The results show that the phenomenon of IPO valuation bubble and executives'resignation in GEM is ubiquitous;the IPO valuation bubble is significantly positively related to executives' resign and cashing out,while corporate governance is significantly negatively related to executives' resign and cashing out.Under the condition of IPO valuation bubble outside,the promotion of corporate governance weaken the relationship between IPO valuation bubble and executives' resign and cashing out to some extent.