The Influence Of Private Placement On Stock Liquidiy

The National Equities Exchange and Quotations(“NEEQ”)market is an important part of China multi-level capital market.All parties pay attention to the development and effects of this new market.There are more and more companies listed on NEEQ and raise money through private placement these two years,but NEEQ secondary market has the problem of illiquidity.The private placement will cause stock liquidity decline,which has been proved by foreign scholars in mature stock market.More Chinese scholars study the relationship between private placement and liquidity in China main board market,like Shanghai Stock Exchange and Shenzhen Stock Exchange.However,the main board market has many restrictions on private placement,and do not have the liquidity problems.Comparatively,the NEEQ market,whose trading system and financing policy is similar with foreign market,has the problem of illiquidity.This thesis studies the stock liquidity problem through the idea of private placement,which is a new angle to research the illiquidity problem for NEEQ stocks under market maker system.For theoretical research part,firstly,this article instructs the current situation of NEEQ market,summarizes the situation of private placement as well as the secondary trading market and conclude the difference of private placement between the NEEQ and main board market.Second,this article analyses characteristics of stock liquidity and summarizes the liquidity measure methods.The stock turnover is selected as liquidity measure based on the features of NEEQ market.In the end,the hypotheses are proposed based on the analysis of reasons effect stock liquidity in NEEQ market.For empirical study part,this article filtrates 149 NEEQ stocks under market marker system(treatment group)which implement private placement in last two years,and filtrate 606 groups data(control group)matching the industry of treatment group which do not have private placement in last two years.By using DID model,empirical study finds that the stock liquidity decrease significantly after the private placement.Then,the thesis uses multiple regression model to find the relationship of shareholder structure,leverage and liquidity.Empirical research finds that,after private placement,the change of shareholding ratio of large shareholder is positively correlated with the change of liquidity,and the change of company's leverage ratio is negatively correlated with the change of stock liquidity.In the end,in combination with practical situation of the NEEQ,this thesis raises relevant suggestions to improve liquidity of NEEQ stock under market maker system.I hope this article could provide a new idea of solving liquidity problems in NEEQ market.