An Empirical Study On The Impact Of The Tiered System On The Performance Of NEEQ Companies

With the continuous development of China’s social economy,small and medium-sized companies occupy an absolute dominant position in the number of companies,and their living conditions are related to employment,economy,and people’s livelihood.As the main equity financing platform and trading venue for small and medium-sized companies across the country,the NEEQ is an important part of our country’s multi-level capital market.In April 2019,the central government issued the "Guiding Opinions on Promoting the Healthy Development of Small and Medium Companies " to encourage small and medium-sized companies to actively enter the NEEQ market for financing and development.Although the NEEQ market has established a tiered system since 2016,the internal companies in the market are classified according to certain standards,and the policy has been adjusted and revised many times according to changes in the market environment.However,in recent years,problems such as financing difficulties for companies in the market have become prominent,and a large number of companies have chosen to withdraw from the market,and the popularity of the NEEQ market has dropped sharply.In October2020,the Fifth Plenary Session of the Nineteenth Central Committee was held in Beijing.The meeting pointed out that it is necessary to continue optimizing the private development environment and cultivating a more dynamic and creative capital market system.In November 2021,the Sixth Plenary Session of the Nineteenth Central Committee emphasized the importance of preventing and controlling financial risks and promoting high-quality economic development.The reform of the tiered system of the NEEQ will become an important area for the government to focus on improving in the next step.As an important indicator to measure the level of company development,performance has always been paid special attention by investors.Only when the NEEQ companies themselves achieve a sufficiently good performance level,can they be favored by many institutional investors and individual investors,and then they can enter a higher level and enjoy more preferential policy support to better solve the problems in the process of their development and promote their long-term healthy development.Past research has shown that changes in performance are often greatly affected by internal policy in capital market.How did the tiered system of the NEEQ evolve? What is the mechanism and conduction path of the tiered system causing changes in the performance of NEEQ companies? What changes will happen to the policy effects on the performance of NEEQ companies when the tiered system reform?Analyzing these issues can provide experience and conclusions for the follow-up development of the NEEQ market.This paper first explains the relevant concepts involved in the article,listing the theoretical research results of past scholars on the capital market stratification,and then expounds the tiered logic inside and outside my country’s capital market,deeply analyzing the mechanism and conduction path of tiered system on companies performance.On the basis of theoretical analysis,this paper takes the establishment of the tiered system in 2016 and the revision of the tiered system in 2018 as the policy time nodes,and selects the 2014～2017 and 2016～2019 NEEQ companies(basic layer and innovation layer)as the two sample groups.The article uses the Factor Analysis model to reduce the dimension of 11 financial indicators of the companies and quantifies the comprehensive performance indicators of the sample companies.On this basis,using the Differences in Differences model and the Propensity Score Matching method,this article empirically studies the impact of the tiered system and its revision on the financial performance of companies entering the innovation layer.The main research conclusions are as follows: Firstly,no matter before and after the revision of the tiered system,the performance of the NEEQ-listed companies selected into the innovation layer shows a significant downward trend,and the revised tiered system has a more negative impact on the performance of the companies selected into the innovation layer.Secondly,if a company’s R&D investment fits in with its own development level,this situation will enhance its market competitiveness and help improve its overall performance;however,if the R&D investment exceeds the company’s own affordability,it will squeeze the daily production funds of the company and reduce the efficiency of the company’s own operation and management,which is not conducive to improving the level of performance.Finally,based on the empirical results,this paper puts forward relevant suggestions for government departments and NEEQ companies.