A Study Of The Efficiency Of Internal Capital Market

The paper make use of theoretical knowledge of firm theory, firm organization economics, tactic management theory , contractual economics and theory of ownership ,etc. The paper use several methods including theoretical reasoning and empirical test to do research on the efficiency of internal capital market, research start with the introduction of relative background, defining internal capital market notion and explaining character. After that, The paper tries to thoroughly, deeply and systematically study efficiency of internal capital market respectively from the perspective of internal capital market formation theoretic logic, running mechanism, incentive effect on division manager and the infection factor etc, basing on the entirely analysis and combining the characteristics of china transition economics structure, the paper set up china enterprise internal capital market theory model to analyze efficiency of china internal capital market. Through comparing examination method, and select one way which is fit for China realistic circumstance, and use the data of the Chinese private listing company to test our theory analysis, then reach our research result. Finally, in full text summary, according to the research conclusion, we bring up the suggestion of some policies. In this process, substantive actual data is adopted, and a number of figures and diagrams, equations and mathematical models are used. The paper tries to thoroughly, deeply and systematically study the theory on efficiency of internal capital market and practice of the efficiency of Chinese enterprise internal capital market.The paper contains three parts, seven chapters, the concrete content of every part is as follows:The first part is the first chapter and the second chapter, chapter one is the introduction of the paper, chapter one primarily hand over studing background and the studied subject, research theoretical meaning and realistic meaning, research frame, research innovation, analysis method, primary points and directions for further research. Chapter twoincludes the definition and connotation of internal capital market which set the range of study, a brief review of former research on efficiency of internal capital market and status quo, which provides a start point for our research.The second part is the core of the paper, including chapter three to six. The part can be separated into the theory research on efficiency and the empirical research on efficiency of capital market. The part thoroughly studies the theory on efficiency of internal capital market, and makes empirical tests on practice of the efficiency of Chinese enterprise internal capital market.Chapter three is the analysis of theories logic for internal capital market formation. First, we analyze the new classic investment theory blemish and Point out that The new classic investment theories do not consider investment' s decision influence factor, then analyze the role of Commercial bank, on the one hand Commercial bank can alleviate information asymmetry problem, one the other hand, there is a limitation about commercial bank investment efficiency improvement because of the contigent right of residual control, The different funds source exits cost difference, internal capital ratio exterior capital the cost is much lower, and the internal capital have the mortgage function to show the function with signal, and can increase the business enterprise exterior margin finance ability, moreover, comparing with commercial bank, the internal capital market have the ownership advantage, and more be benefit to realize to inspect to transfer property to item.Chapter four analyze running mechanism and the affection factor of the internal capital market efficiency. First the paper analyze the internal capital market movement mechanism from the aspect of information flow, funds flow and organization construction. On the basis of the analysis of running mechanism of internal capital market, the paper embed internal information structure, influence activity and agent problem which is the main affection factor to the running process and analyze how these factor affect the efficiency of internal capital market. As for theagent problem , the paper consider the two-tier agent problem. One tier agent problem exist between shareholder and CEO, the other one exist between CEO and division manager. The chapter four studies the most important and the most ultimate part of internal capital market efficiency, the efficiency of internal resource allocation.Chapter five analyze the incentive effect of internal capital market on the division manager. Winner-picking function of internal capital market reduce manager incentive, on the contrary , more-money effect can increase manager incentive. After analying two aspect incentive effect, I compare the effect of more money effect with ratio-left effect, then reach some generalization result.Chapter six studies efficiency of Chinese enterprise internal capital market from an empirical perspective, the paper select private-owned listing company as research object and regard all private-owned listing company which is owned by one ultimate private enterprise, or one family, or one person controller as one whole entity. Through deeply discusses advantage of different analytical methods and advances relevant proposals of selecting our studying way. Then compare the performance with single private-owned listing company with the multiple private-owned listing company. Empirical study indicates that Chinese private enterprise internal capital market is low efficiency . the chapter establish the relation between the internal market efficiency and the some practice such as firm value and firm performance, and there exist the plus relation between themThe third part is chapter seven, the chapter summarize the whole paper briefly and advances some policy proposal on promoting internal capital market efficiency.