Listed Companies Selected For NEEQ Innovation Tier And Financial Reporting Quality

As an important part of China's multi-level capital market system,National Equities and Exchange Quotations(NEEQ)is positioned to provide financing services for innovative and entrepreneurial SMEs.Since its inception in 2013,NEEQ's market size has expanded rapidly and has had a large number of listed companies.Due to the differences between the large number of listed companies in terms of production and operation,corporate governance,financing needs and market performance,NEEQ put the tiered management system into force in May 2016.The purpose of the tiered management system is to better meet the differentiated needs of SMEs,rationally allocate regulatory resources and reduce the information integration of investors.As a bridge and medium for SMEs to communicate with outside investors,financial reports can help alleviate the information asymmetry in the NEEQ market.Will the financial reporting quality of listed companies be improved when they are selected for the innovation tier?Studying the influence that listed companies are selected for innovation tier on the financial reporting quality can help NEEQ develop healthily and stably.This paper reviews literatures about financial reporting quality and NEEQ,and introduces the theory of financial accounting supervision,information asymmetry and the transaction cost.Based on this,the paper puts forward the hypothesis about financial reporting quality and the tiered management system.According to research needs,this paper takes the company listed in NEEQ from 2013 to 2017 as a research sample,and comprehensively uses descriptive statistics,correlation analysis,differences in differences model,propensity score matching and other methods to study the relation between the tiered management system and financial reporting quality,and take the regulatory role of debt governance into account.The research results show that after being selected for the innovation tier,the earnings of the financial statements of the listed companies have been significantly improved,the reliability of financial reports has also improved significantly,and the impact of debt governance has a substitution effect.Further analysis finds that the effect of being selected for innovation tier and the effect of sponsored brokerage can be complemented.In terms of earnings quality,the effect of being selected for innovation tier and the effect of independent directors can be replaced;as for financial reporting reliability,being selected for innovation tier and independent directors can be complemented.This paper has two innovational points:(1)The tiered management system is an important attempt of China's multi-level capital market reform.Previous studies have focused on listed companies at the innovation level,while this paper uses this quasi-natural experiment empirically tests the impact of the overall effect of the NEEQ's tiered management system on the SMEs' financial reporting quality,and provides a new utility testing approach and paradigm for evaluating the reform of the NEEQ system.(2)Enriched the research perspective on the financial reporting quality.This paper reveals the promotion effect of listed companies being selected for innovation tier on the financial reporting quality and enriches literatures on the economic consequences of the reform of the NEEQ.