The Empirical Research Of Allocation Efficiency Of Internal Capital Markets Based On The Segment Information Of China's Listed Companies

With the increasing pressure that enterprises faced in the production process, to establish business groups has become a consensus to all companies, and more and more attention is focused on the internal capital market of these business groups. Therefore, it's extremely important to study the existence and efficiency of business group's internal capital market based on internal capital market theory.Based on the review of related research literature, this paper analyzes the financial functions of internal capital market and their influencing factors. The formation and operation mechanism of internal capital market in Chinese enterprise group is also discussed in the paper. The sample of the study is those listed companies which publicly disclosure their segment reports. By using methods of cash flow-sensitivity, the existence and efficiency of internal capital market are analyzed in the paper. And the impacts of internal financial intermediation and configuration of internal capital market to the allocation efficiency are also investigated through empirical research.The empirical results show that:first of all, an active internal capital market dose exists in Chinese business group, but the overall Allocation efficiency is not high. Secondly, there is a positive correlation between the internal capital market efficiency and internal financial intermediaries, and the existence of financial intermediaries can improve the efficiency of internal capital market. Thirdly, there is a positive correlation between firm size, internal diversification and internal capital market efficiency. Finally, this paper presents some suggestions, such as improving the disclosure Rules of segment reporting of listed companies, strengthening the supervision of the process of internal capital allocation, and making full use of internal financial intermediaries.