A Comparative Analysis of Financing Performances of Listed Companies on GEM and the Influence Factors before and after IPO

Xiangdong Chen, Fei Wang, Wei Wang
2017 International Journal of u- and e- Service, Science and Technology  
Since the launch of Growth Enterprise Market (GEM) in China, its role in the capital market has become increasingly important. In recent years, many scholars have researched on the changing conditions of business performance before and after listing of Initial Public Offerings (IPO) companies. But most studies so far used directly selected traditional performances and innovative performance evaluation indexes to conduct a comparative analysis between conditions and innovations before and after
more » ... s before and after IPO. Different from the previous studies, this paper cites the latest data of Chinese GEM at the end of 2014 in the selection of performance evaluation indexes and finds out the most influential ones on financing capacity based on correlation analysis; next, it further screens the indexes with regression tests; at last, it analyzes a comparative analysis of the screened indexes with the most significant influence on financing capacity before and after IPO. Thus the continuous changes of indexes with real influence on financing capacity before and after IPO can be revealed more objectively. Research findings suggest that enterprises' technological innovation input and numbers of annual patent applications increase continuously during the studied period and the research and development (R&D) intensity rises stably as well, indicating that as they develop continuously, enterprises have paid increasing attention on the enhancement of technological innovation capacity and the protection of patent and intellectual property. But each business performance indicator had obviously increased before the IPO and decreased after the IPO. This verifies that companies tried to "sugarcoat" their financial reports before the IPO which overrated the business performance. The companies were listed during the period of better business performance in order to achieve a higher issued premium price. After listing, performance may result in decrease of benefits. before and after the IPO financing. Li Yanghui (2008) pointed out that the uniqueness of a high-tech company decides its use of GEM as new financing channel and withdrawal channel for venture investment [1] . Yiuman Tse,Erik Devos (2004) believed NASDAQ can provide financing platform for many high-tech enterprises and help them to attract more corporate investors, which brings plenty of earnings for these high-tech companies [2] . Moreover, China's GEM has also solved financing problems in smalland mediumscale companies on top of being an important tool in promoting and accelerating the development in the high-tech field. Enterprises achieve future development by seeking financing by listening on the stock market. Each company hopes to have better business performance during IPO and to attract more investors. Thus, more financing is achieved with a lower cost, which causes companies to try to "sugarcoat" their performance before the IPO and may see a decrease in performance after the IPO. This paper analyzed these two issues. The first one is to analyze factors that affected IPO financing capacity of these enterprises and to find performance indicators to measure these factors. The second issue is based on the first one. These selected performance indicators that affect financing capability as well as changes before and after IPO were analyzed.
doi:10.14257/ijunesst.2017.10.5.01 fatcat:77bpuvvhjvcmlpccjpou4ufcym