The Tiered System and the Innovation of SMEs:From the Perspective of Governance Mechanism Based on"Lemon Market"
Since the National Equities Exchange and Quotations(NEEQ)was established in 2013 in China,it has not only seen a rapid increase in listed enterprises but also faced significant development bottlenecks.Notably,nearly half of these enterprises have had no market transactions post-listing,highlighting issues with stock liquidity and transaction volume.This stagnation is attributed to several factors—the NEEQ's institutional arrangements have not fully tapped their potential,failing to offer differentiated financing services suitable for enterprises at various development stages.Additionally,the regulatory framework,particularly the information disclosure system,is not robust enough,complicating investors'information gathering and decision-making in a vast market.Furthermore,enterprises often disclose only limited information about innovations and R&D,withholding details of potential risks and technological advantages to attract external financing while minimizing disclosure costs.This behavior exacerbates the challenges in assessing enterprise value and making informed investment decisions.Since 2016,the NEEQ has divided listed enterprises into two tiers—the basic tier and the innovation tier.This stratification aims to tackle the"lemon market"problem within the NEEQ by providing a certification mechanism that distinguishes high-quality enterprises.Enterprises in the innovation tier gain increased visibility and credibility through third-party certification,influencing investor perceptions and potentially correcting pricing disparities.These enterprises are also subject to stringent information disclosure standards,reducing investors'research burden and adjusting risk-return expectations.This study analyzes NEEQ-listed enterprises by using patent applications and R&D expenditures as measures of innovation output and investment.The 2016 implementation of the tiered system is used as a quasi-natural experiment.Enterprises in the innovation tier are compared to a control group from the basic tier that meets the financial criteria for the innovation tier.A difference-in-differences model is used to assess the tiered system's impact on innovation.The findings indicate that joining the innovation tier significantly increases an enterprise's innovation output and innovation investment.These results are supported by additional robustness tests.The mechanism behind this is that innovation-tier enterprises experience improved stock liquidity and reduced financing constraints,leading to heightened R&D investment and innovation output.The heterogeneity test revealed that the impact of the tiered system on enterprises'innovation levels mainly exists in enterprises with more institutional shareholdings and private placement financing.This study also explores the Beijing Stock Exchange's influence,finding that its listed enterprises exhibit higher levels of patent applications.The study contributes to the literature in several ways.It extends the analysis of tiered systems beyond financial performance to innovation decision-making,shedding light on how China's financial system affects micro-level decisions.It enhances our understanding of the drivers of enterprises'innovation and elucidates the tiered system's role in reducing adverse selection.By viewing the certification mechanism as a solution to the"lemon market"problem,it links stock liquidity to innovation behavior,providing empirical evidence for the role of the financial system in fostering the real economy's high-quality growth and guiding capital market reforms.In terms of policy implications,the study suggests optimizing NEEQ's stratification standards,increasing tier entry frequency,and diversifying entry criteria to benefit more small and medium-sized enterprises(SMEs).It advocates for a system that allows high-quality NEEQ enterprises to transition quickly to the Beijing Stock Exchange,facilitating initial public offerings for SMEs focused on R&D and core technology development.Additionally,it calls for expanding the investor base on the NEEQ,optimizing investor structure,and potentially lowering investor entry thresholds based on the risk and liquidity levels of listed enterprises.The establishment of the Beijing Stock Exchange in 2021 represents an evolution of the NEEQ's tiered system,injecting new vitality into the market and supporting the growth of innovative SMEs.This study provides a policy evaluation of the tiered system through causal inference,offering insights into its reform and deepening.Since the Beijing Stock Exchange has only been established for a relatively short period,we need to wait for more data to further test the effect of the Beijing Stock Exchange on the behavior of SMEs.
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