A Study On The Impact Of Board-Switching To Corporate Valuation

China's economy has developed rapidly since the reform and opening-up.China's Capital Market consists of Main Board and Small-and-Medium Board,Growth Enterprise Board(GEB),National Equities Exchange and Quotations(NEEQ)(New OTC Market),Regional Equity Trading Market(The fourth Board).However,due to the complexity of the capital market and the diversified development of the market economy,the domestic multi-level capital market is facing many unprecedented challenges at the same time.One of the main statuses is that tens of thousands of small and medium-sized enterprises in the New OTC Market have the problems such as being undervalued,financing difficulties and poor stock liquidity.Their business value is not really reflected by the market price.Those enterprises in NEEQ are trapped in low volume situation and continued market decline.China's IPO issuance had begun to show a speed-up trend since November 2016 which stimulate a large number of companies in NEEQ to apply for IPO or to take IPO tutoring.Under the policies of putting off the Strategic Emerging Board and tightening back door listing,more and more enterprises in NEEQ with good quality have tried to or have switched to the Main Board or GEB.Whether and how switching board can enhance corporate valuation and whether switching board can continuously improve the corporate valuation,has yet to be verified.This thesis takes Beijing Kyland Technology Co.,Ltd as a case which had switched from NEEQ to GEB successfully in 2012(hereinafter called “Kyland Tech.”).Based on the data provided in the Annual Report of Kyland Technology from 2009 to 2018,this paper compares corporate valuation before switching with corporate valuation after the switching,and studies which factors can enhance corporate valuation and whether switching board can continuously improve the corporate valuation.By comparing the value of P/E ratio before and after the switching,this paper analyzes the changes of the influence factors such as enterprise cash flow,enterprise goodwill,stock liquidity and corporate governance structure before and after the switching.We found that switching board can indeed enhance the corporate valuation.The reasons for the increase of corporate valuation are as follows: First,equity private placementafter switching board improves enterprise cash flow.Second,enterprise goodwill increases after switching board.Third,stock liquidity increases because of switching to a high-level capital market GEB.Finally,the introduction of small and medium-sized shareholders optimizes the governance structure of enterprises.The combination of these four factors has resulted in a significant increase in corporate valuation after switching board.Switching board can be one way to improve corporate valuation but not the only way and it is impossible to continuously improve corporate valuation.If enterprises want to improve corporatevaluation stably and continuously,it is necessary to define clear strategic,to expand influence of brand,to increase market share,to improve business performance and financial data and to optimize the governance structure of enterprises in order to enhance core competitiveness and endogenous growth.The purpose of this thesis is to provide help for sustainable development and better financial situation through the analysis of enterprise valuation of Kyland Technology before and after the switching,as well as analysis of the influencing factors of enterprise valuation changes.This paper also wants to provide enlightenment to other enterprises in NEEQ who want to improve the enterprise valuation by switching board.