The research of GEM-listed companies' financing problems under the perspective of financial governance

Growth enterprise market (GEM) is committed to solving the funds shortage problems faced by small and medium-size enterprises (SMEs) in China. Due to the factors such as the size limit of SMEs, the instability of their income, and the imperfection of the companies' financial governance, there exists a big risk in the GEM. This paper proceeded from the perspective of financial governance, analyzed the financing problems faced by the GEM, and gave advises to reduce the risk. By comparing 217 samples of GEM-listed companies between 2010 and 2011, we did an empirical research of the relationship between financial governance effect and the company's financing structure by the regression model. We find that the GEM manufacturing listed companies have a preference on stock financing over debt financing. Moreover, the debt financing has a more outstanding effect on the financing governance than stock financing. It encourages Chinese GEM manufacturing listed companies to strengthen their corporate financial governance and choose the right financing structure according to the enterprise's own characteristics, thus promoting the healthy and rapid development of China's GEM market.