Resource Allocation Strategy Internal Capital Market Efficiency And Enterprise Value

In recent years diversification swept the world, many enterprises in China selected the diversification strategy. When a number of companies enjoyed the fruit of pluralism, many companies due to blindly diversifying confronted poor operating performance or even fell into the plight of the verge of bankruptcy. What effect does diversification produce on the enterprise value? To address this issue, many foreign researchers through theoretical and empirical analysis, have made a series of interim results, summed up in two conflicting views-diversification discount or diversification premium. As there is a capital market in the diversified company, some scholars attribute the diversification discount to the inefficiency of internal capital market. Drawing on overseas studies, Chinese scholars carried out some researches, but they were mostly limited to the theoretical level, empirical results were rare and lacked consistent conclusions. Meanwhile, Chinese scholars tend to treat diversification as the internal capital market without clearly decrypting the relationship among internal the capital market, diversification and corporate value.Therefore, after reviewing the findings of scholars at home and abroad, this paper on the basis of a more reasonable measure of internal capital market efficiency and three indicators of measuring diversification selects Tobin's Q as a metric of value and the H-share listed companies segment data as samples, controls the relevant impact of endogenous variables and tests the relationship among internal the capital market, diversification and corporate value. Through filtering and processing the H-share listed companies'division data from 2004 to 2008, this paper uses multiple regression empirical research method and gets the conclusion that specialized companies have obtained a higher enterprise value, the reasonable diversified firms tend to have a higher value for the diversification enterprises and the internal capital market produces less effect on the value.This study provides not only the experience for Chinese Enterprise Group of choosing business strategies, but also some reference material for the study of the relationship among internal the capital market, diversification and corporate value. Especially through the H-share market research, the study provides a theoretical basis and research methods for the listed companies in A-share market.