Empirical Research Of The Transparency Of Accounting Information And The Efficiency Of Internal Capital Market

For group enterprise, companies financial problems are not just about the transparency of accounting information, the corporate governance, corporate performance, also involve the existence and efficiency of the internal capital market. The problem of the internal capital market allocation efficiency has been much interest in many research circles today. This article selects group enterprise as the research object and gives theory analysis research of the corporate governance and internal capital market. This paper elaborates the two issues of the transparency of the accounting information and the efficiency of the internal capital market combined the fields of corporate governance about the ownership structure. That has a positive meaning to strengthen the corporate governance and the internal capital management.The concept of internal capital market has been put forward by Williamson, the American economics, in1975. He defined the phenomenon of internal departments competing around the capital as internal capital market(hereafter referred to as ICM). ICM is a new field obsessed with the development of group enterprises and growing advance of multiplex management and becomes the focus of research with the rising strategy of multiplex management and mergers&acquisitions. Today with the development of group enterprises, more and more departments need to assemble and allocate funds internally. The research on the efficiency of that appears particularly important.The transparency of accounting information is a part of the corporate transparency(Bushman&Smith,2004). The purpose of increasing the transparency of accounting information is to increase the corporate transparency and to reduce the behavior of the adverse selection in the capital market. There are many definitions about the transparency of accounting information. Basel Committee on Banking Supervision(1998), the high level of the transparency of accounting information means that investors can look at the essence. Wei Minghai and Liu Feng (2001) think the transparency of accounting information is a comprehensive concept involving the standards of accounting information quality and the implementation of that. Financial fraud is still common both in domestic and abroad since the South Sea Petroleum financial fraud scandal erupted. So the research of improving accounting information quality and increasing the transparency of accounting information is still important. There are many factors affecting the accounting transparency. This paper chooses two of that, corporate governance and corporate profitability, to analysis through theory combined with empirical.Corporate governance is also called administering structure or company regulation. Corporate governance is a main tool used by owners to encourage and monitor managers through system, formal or informal, internal or external, coordinating the profitable relationship of all stakeholders. That can make sure that the decision-making is scientific and maintains profits from all aspects within the company. Corporate performance can be measured by corporate profitability. There are two main measurement indexes:one is the company’s accounting earnings, such as the net assets per share, return on equity, return on total assets, etc.; the other one is the company’s market performance, namely the company’s stock returns, people judging whether the prospect is good or bad is through corporate performance. Corporate governance and corporate profitability have a natural relationship each other. They have a direct relation with accounting transparency. This article discusses the affection to internal capital market efficiency of that two factors at the same time.This paper mainly studies the internal capital market and accounting transparency, explores the directly relationship between them and expands the research field. Adding two factors of corporate governance and corporate profitability, analyzing nature of equity in corporate governance, proportion of block holder and the influence of corporate profitability on the accounting information transparency. And verifying whether these factors have some direct effect on the internal capital market simultaneously. This article will give a conclusion of relation about the internal capital market, the accounting transparency, the corporate governance and the corporate performance. One of this paper’s innovations is that the research topic is novelty, capital market to study the relation between them by the theory combined with empirical. Then the ideas is new. I analysis the relation between the corporate combining two hotspots, the accounting information transparency and the internal governance and the corporate performance in two main fields. The last innovation is focus on the improving variables and selecting data.