The Relevant Empirical Studies Between The Efficiency Of Internal Capital Market And Corporate Governance

Many scholars all over the world did a large number of studies on the efficiency of internal capital market on a variety of perspectives in recent years, but they had different opinions. This paper attempts to do some study about the efficiency of internal capital market on corporate governance, and corporate governance is an important factor of the efficiency of internal capital market.Because listed companies in China didn't provide financial data of the division in details, the previous scholars mostly select indirect research method to study, established comparison's models to analyze the efficiency of internal capital market. This paper is different from previous studies because it select the direct research method, using Hong Kong-listed of China's company that its main business in mainland as a sample. There are two reasons: firstly, the sample can use classical measurement model of western, secondly, the sample can represent the characteristics of listed companies of our country. In end, this paper use the models to analyze how the structure of corporate governance affect the efficiency of internal capital markets. Empirical analysis found that: participating in the samples examined, the number of shares of the first major shareholder and the efficiency of internal capital market in enterprise groups has negative correlation, that is, the higher the proportion of the largest shareholding, the first shareholder have the more share concentrated, the lower the efficiency of internal capital market is, and the proportion of independent directors on the board and the efficiency of the internal capital markets have a positive correlation, that is, the more independent directors officers, the higher the efficiency of internal capital market is, because the more independent directors officers can play the role of supervision and encouragement. The proportion of management ownership of shares and the efficiency of internal capital market allocation does not pass the significance test.So the conclusion is that, listed companies in China must strengthen their corporate governance mechanisms, resolve the agency problems between the first major shareholders and small shareholders, and enhanced management and supervision, to improve the governance mechanism and management efficiency of listed companies in China. Only in this way can be done in listed companies, the internal capital market can play its proper advantage to rationally allocate internal resources to create more wealth for enterprises.