Research On The Efficiency Of Enterprise Internal Capital Market In Our Country

Both of internal capital market and external capital market are the ways of enterprise resource allocation. The existence of internal capital market is based on the external capital market which is not perfect. The internal capital market avoids the cost arising from the external capital market, expands the financing channels, and can help investors to be able to more efficiently monitor the process of the project, so as to realize more efficient allocation of resources. Of course, the internal capital market will also lose its effectiveness sometimes. Because of the presence of agency problems, information distortion, as well as the major shareholder of occupation of the interests of minority shareholders, etc., led to part of the function of internal capital markets have been alienated inefficiency.In this paper, on the basis of the existing theoretical research, focus on whether China's enterprises to build internal capital market is really brought about a higher efficiency; through theoretical studies and empirical studies both analysis and description; at the last, based on the results of the research, put forward policy recommendations for improving the internal capital market in China's enterprises.In the theoretical studies, a comprehensive analysis the strengths and weaknesses of the internal capital market relative to external capital market, come to the capital market weakness is due to the internal capital market structure is not complete in itself. In the empirical research, to listed companies in China, for example. By defining the scope of the internal and external capital market, using the sample data of Chinese listed companies, having an empirical study on whether China's enterprises to build internal capital market is really brought about a higher efficiency;. This study concluded that the internal capital market reduces the business value, Chinese internal capital market relatives to the external capital market is inefficient, there are more prominent disadvantage in Chinese internal capital market. In the empirical study also reveal that three main factors affect the efficiency of internal and external capital markets, namely, the shareholding ratio of the largest shareholder, board of directors, executives. The result of the research on the correlation between these three shareholding ratio and the efficiency of internal and external capital markets, used as a basis for putting forward policy recommendations to improve Chinese internal capital market. Specific conclusions include: The higher the shareholding ratio of the largest shareholder would undermine the efficiency of internal and external capital markets; to increase the shareholding ratio of board will help improve the efficiency of internal and external capital markets; when the management's shareholding ratio at a lower percentage, increasing management's shareholding ratio will improve the efficiency of internal and external capital markets, but when the management's shareholding ratio at a higher percentage, increasing management's shareholding ratio will reduce the efficiency of internal and external capital markets. Putting forward policy recommendations on the shortcomings of Chinese internal capital market which include: Strictly restrict the operation of internal capital market, fully disclose information; reduce the shareholding ratio of the largest shareholder, effectively protect the interests of small shareholders; increase the shareholding ratio of the board, play the supervisory role of the board; limit management's shareholding ratio, and effectively incentive management.