Empirical Research Of The Relationship Between Internal Captial Market Effciency And Corporate Value

In the mid and late1950s, the United States and the European enterprises of thedeveloped capitalist countries began to go diversified route, they formed by means of jointmerger and many big collectivize enterprises. In order to make the enterprise resourcesplay a maximum efficiency, group headquarters will all resources are allocated betweeneach branch, enterprise group’s internal capital flow lead to the internal capital markets.Internal capital market can promote enterprise value, may also damage the enterprisevalue. Its role in promoting enterprise value displays in: first, compared with the externalcapital market, due to the corporate headquarters with full information in a wide range ofdivision, through internal capital markets can be more effective configuration of enterpriseresources; Second, in the internal capital market, the company’s headquarters with theremaining control of resources, enterprise managers can determine capital invested in theenterprise of the distribution of each division, thus make the limited funds to benefit thelargest division or project, to avoid waste in the running bad projects funds; Third, madeup of multiple business division of the group company to be able to more effectiveabsorption of external funding, internal capital markets can bring much effect, so as tomake up for the loss of enterprises because of inadequate financing.Damage internal capital market performance of the enterprise value are: first, thecompany’s headquarters with the surplus control of enterprise resources, but if theenterprise has too much free cash flow, the enterprise will be expanding desire, companiestend to invest too much, excess cash flow will not necessarily department into theproduction efficiency is higher, it will into the project return on investment is very low oreven negative, produce a kind of egalitarianism phenomenon; Second, corporate agencyproblem caused by large shareholders encroach on minority shareholders interests. Due togenerally relatively concentrated control of enterprises, investors relatively decentralized,and this makes the control over the cash flow right of controlling shareholders, bigshareholders encroach on the interests of small shareholders phenomenon, thisphenomenon makes the enterprise value; Third, the indemnification problems in enterprisemergers and acquisitions. When the merger between the enterprises and other enterpriseson the one hand, can reduce enterprise stock price and the harm the interests of investors tosome extent, on the other hand also can make the takeover enterprise stock prices rise, theventure controlling shareholders can pass the indemnification benefit; Fourth, the layers ofagency problem. Internal capital markets can solve the agency problem between outsideinvestors and managers, but also creates a new agency relationship, such as corporateheadquarters with the agency problem between each division managers, and the generationof new proxy conflict can damage the enterprise value.In this paper, study and draw lessons from the domestic and foreign scholars on the internal capital market efficiency and enterprise value relations related theory researchresults, in our country from2009to2012, A&H shares listed companies as samples,collected samples of the company’s assets return rate, return on investment, return onequity, asset-liability ratio, total assets, such as data, and based on the improved based onthe previous returns on capital cash flow sensitivity method, direct method applied todetect samples of internal capital market efficiency, finally by building regression model,to the enterprise internal capital market efficiency and enterprise value relations has carriedon the empirical analysis. In the process of empirical research, first has carried on thedescriptive statistical analysis, to sample data by observing the statistical results of internalcapital market efficiency index, we find that internal capital market as a whole presents theeffectiveness of our country. Of regression model, in turn, we then variable correlation test,F test and T test, the empirical results show that the internal capital market efficiencyindexes and table in return on net assets of the enterprise value index showed significantpositive correlation, but with no significant correlation between return on assets, return oninvestment targets.Through the study of this article, we have the efficiency of internal capital market inChina is that the answer was yes, the past many scholars use the indirect method of internalcapital market in China is invalid conclusions compared clearly has more realisticsignificance. In addition, in this paper, the results showed that the internal capital marketefficiency and corporate value, this fully affirmed the internal capital markets play apositive role in the enterprise capital operation, effective internal capital markets candeposit in the promotion of enterprise value, enterprise should pay attention to theconstruction and application of internal capital markets, the internal capital market for theenterprise to create more wealth.