The Analysis Of The Influence Factors For The Market Makers Select Stocks In NEEQ

Actively developing and improving the National Equities Exchange and Quotations(NEEQ)is of great significance.It will help to broaden the financing and M&A channels for innovative,entrepreneurial,small and medium-sized enterprises in China.It will also lay the foundation of the development for the multi-level capital market of China.The introduction of the market maker system is an important node in the development of the NEEQ.In the NEEQ,it is more advantageous for enterprises to transfer shares in a market-making way,but in fact,not all the stocks are transferred in this way.Some stocks have at most 17 market makers at the same time,but some stocks are not interested.The market makers can choose the enterprises freely,and a market maker can simultaneously market for multiple stocks.However,the market makers did not publish clear targets for the selection of stocks.The stock selection criteria only involved some general factors.Therefore,in order to uncover the veil of the market makers' selection criteria,this paper takes the stocks as the research sample in the NEEQ,deeply discusses which factors will affect the market makers' selection criteria,and the conclusions can provide suggestions for enterprises which seek market making actively.First,this paper reviews the development history,main functions and research status of the market maker system.Second,we establish a theoretical model for market maker system.In the model,we analyse the theory of the conduction path,select the factors that should be considered,and give the expectation of the each selected factor.Third,this paper conducts empirical tests based on the expectation.We take the NEEQ listed enterprises during 2014 to 2016 as our research samples,and discuss the factors of which influence the market makers' selection criteria,using the Logit regression and the Tobit regression analysis respectively.The study discusses the factors related to the governance situation of enterprises further.We find that the external financing demand of enterprises has a moderating effect.In addition,the results show that the reputation and background of PE/VC are also the two factors that affect the market makers' selection criteria.The results show as follow: Among the factors related to the enterprise's characteristics,the higher the enterprise's profitability and the lower the enterprise's solvency,the more inclined the market makers will select the enterprise's stock,andthere are more market makers;additionally,the stronger the liquidity of the stock is,the more likely the market makers will not select the enterprise's stock.On the other hand,among the factors related to the governance situation of enterprises,the higher the shareholding ratio of the major shareholders,the more inclined the market makers will select the enterprise's stock,and there are fewer number of market makers.Besides,we find that the external financing demand of enterprises has a moderating effect on the relationship between the shareholding of major shareholders and the market makers' selection criteria.Specifically,when the external financing demand of the enterprise is small,the shareholding ratio of major shareholders has a significant negative impact on the market makers' selection criteria.When the external financing demand of the enterprise is large,the negative impact is non-significant,and the external financing demand also weakens the negative influence of the shareholding ratio of major shareholders on the number of market makers.In addition,when the enterprise has PE/VC intervention,the market makers are more likely to select the stock of this enterprise,and there are more market makers.Further,an enterprise who is invested by PE/VC with the higher reputation and foreign background is more inclined to be selected by the market makers.And,an enterprise who is invested by PE/VC with the foreign background has more market makers.