Ownership Structure, Internal Capital Market Efficiency And Firm's Performance

Half of the 19th century and early 20th century, along with economic development, the organizational form of enterprise groups came into being, and has shown these features that lowering operating cost and improving efficiency. Thus people began to focus on the configuration of the internal capital market efficiency. But academics have not reached consensus on the configuration of the internal capital market efficiency.In China, listed companies are mostly formed by original state-owned enterprise reform. On one hand, "one strong stock" phenomenon had commonly existed in ownership structure. On the other hand, listed companies have closely contacted with parent company and its subsidiary companies, revealing the characteristics of internal capital's allocation and the specific performance of the Group within a large amount of related capital spending, related guarantees and related commodity trading in the group internal. At present, in the case of our company's relative concentration and the lack of controlling shareholders'checks and balances, large shareholders can use the internal capital market behavior to transfer the listed companies'benefits and "hollowing out" the listed companies. As the completion of share reform of China's listed companies, large shareholders'absolute control may be gradually released, and the "Big Stock" phenomenon can be improved gradually. Meanwhile improved balance and equity shares and dispersed shareholding structure will become the development trend of listed companies in China. Therefore, it is practically important to study on the efficiency of internal capital market and the intrinsic link among equity structure, the internal capital market behavior and corporate performance.Firstly, this paper defines the concepts of ownership structure and internal capital markets and sorts out their literature. Secondly, this paper analyzes the status of ownership structure and internal capital market of the listed companies in China. Thirdly, based on related transactions perspective, this paper takes empirical study on the efficiency of internal capital markets. Then this paper studies the economic consequences of internal capital markets aroused out by major shareholder and reveals government effects of ownership structure. Finally, this paper puts forward policy recommendations.By empirical research, this article researches conclusion following, these internal capital market behaviors associated with financial transactions and guarantees have the "hollowing out" effect and reduce the enterprise value; the internal capital market behaviors that related goods show the characteristics of"support of the interests"and facilitate business performance. Effects of ownership structure's governance show: The more shares the largest shareholder has, the more transactions in the internal capital market there will be. If a firm is absolutely controlled or multiple controlled by its shareholders, tunneling by the controlling shareholder with the relative party's lending and borrowing in the internal capital market exists, decrease in firm's performance emerges as a sequence. But if there is no controlling shareholder in the firm, namely the ownership is scattered widely, the internal capital market can allocate resource efficiently by the guarantee in relative party's loan from bank and account payable or receivable among the relative parties, increase in firm's performance arises as a sequence.