Study On Internal Capital Markets’ Value Destruction Of The Enterprise Group

Internal capital market is the place in which business groups’resource is incorporated and re-allocated, and its essence is an inner market behavior. Internal capital markets has the function of reducing the information problems and inspiration conflicts between the enterprise and external capital markets, reducing the financing cost and improving the financial resources’ allocate efficiency. The operating efficiency of internal capital markets decides whether the enterprise groups’advantage can be exerted adequately. Present literatures are main concerned on the resources allocate characteristic and efficiency of Internal capital markets in diversified enterprise groups, focused on finding the influence of different institutional arrangements to internal capital markets’value creation. This paper researches the problems of internal capital markets’value destruction on the theory of Double Principal-agent theory, aimed at finding the reason of internal capital markets’ value destruction.Firstly, we analyze from a theoretical perspective, on the basis of the introduction of relevant theories, we definite the value destruction in internal capital market, introduced the behavior of Double Principal-agent How to destroy the value of internal capital market. Then we discuss the influencing factors from the perspective of management agent and Major shareholders agent. Thirdly, by choosing proper samples and indexes, we take an empirical testing on the influencing factors of internal capital markets’ value destruction. The result of this research shows that:The internal capital markets’ value is significant positive to managerial ownership and salary; The duality of general manager and the chairman is significant negative to the internal capital markets’ value; The management expense rate significant negative to the internal capital markets’value.The largest shareholder’s share proportion, The ratio of the largest shareholder’s share proportion and second shareholder’s share proportion is negative to the internal capital markets’ value; The separation factor of cash flow right and control right, the occupancy of funds is negative to the internal capital markets’value; The proportion of the top five shareholders, the proportion of independent is significant positive to internal capital markets’value.Finally, we summarize the main conclusions of this paper and bring forward the future research directions.