Empirical Research On Relationship Between Corporate Governance And Internal Capital Market Efficiency

In1960s, the large-scaled cooperate wave swept over the USA and in other developed countries, a large number of diversified companies were formed, which interested the researchers of theoretical and business circle to study the diversified companies. They positively explored the operating systems, exist reasons and value the influence of these companies from the angle of internal capital market. The arrangement of internal capital market taking the place of external capital market, which generate from improving the efficiency of capital setup. However, discoveries at home and abroad showed internal capital market was always low-efficient. So far, the phenomenon (called Refocusing) rising from some countries, like stripping, integrating or cutting size of diversified companies was the corrective measures to diversify discount. Studies at aboard showed that double agent and the governance problem of equalitarianism and manager’s rent seeking were the major reasons of the low-efficiency of internal capital market. In China, when the economy is transferring to a different track, the property right is reforming, cooperation governance is imperfect, agent problem is serious, cooperate stock is highly concentrated, the agent relationship exists not only between shareholders and managers, but also in the owning right between strong and medium and small shareholders. Therefore, in the aspect of cooperation governance, the efficiency of internal capital is studied so that the governance level of industries to cooperation will be raised, the internal capital market efficiency will be improved. Playing the role of internal capital market to configuring the resources is significant and an effective supplementary for the imperfect external capital market.This essay researches for the influence of corporate governance and external capital market configuration by adopting the standard empirical research according to principal-agent theory, asymmetric information theory, Tunneling and Supporting theory. Firstly, its summary about the available documentary of internal capital market efficiency and cooperation governance shows that there are many studies about their differences, and most of these studies are individual. Combining them, this essay brings the study angle internal governance system from cooperation governance, including shareholding ratio of managers, concentration of stock rights and the structure of boarding, to study internal capital market efficiency. Secondly, analyze the formation and operation of the internal capital market, in order to understand the operation of the internal capital market theory. Thirdly, analyze the influence on the internal capital market efficiency from the management of agency and ownership level agent angle, which combining the internal governance mechanism (ownership structure, board structure and management ownership and so on) in order to solve the agency problem.And then propose the hypothesis of this paper:(1) Shareholding and internal capital market efficiency is positive correlation.(2) The ownership concentration and the efficiency of internal capital market positively correlated.(3) The proportion of independent directors and internal capital market efficiency is positive correlation. Finally, using the direct method and indirect method of enterprise group’s internal capital market efficiency is measured, and the influence of corporate governance factors for empirical test, the conclusion of the paper and suggestions.This essay, mainly based on the entire branch information about270listed companies in shanghai and Shenzhen from2010to2012, considering the incomplete information (mainly the branch report) of internal capital market index, measures the internal capital market efficiency by the empirical measure module improved by Wang Fengjuan and Xie Zhihua for Chinese special surroundings, analyzes the index by SPSS18, inspects the inner relationship between managers’ shareholding, the concentration of stock rights, and the structure of boarding and internal capital market efficiency. According to the analysis of theories and empirical measure, conclusions are as followings,(1)managers’ shareholding ratio and internal capital market efficiency are positively correlative, but the correlative index is low and doesn’t pass the obvious inspection. It proves that managers’ shareholding is good for improving the internal capital market efficiency. However, stimulating degree to managers’shareholding is weak and the shareholding ratio of managers is low so that it can’t play an important role.(2)The concentration of stock rights and internal capital market efficiency is positively correlative. It proves that the more concentrative the stock rights, the larger interests of the companies the shareholder will consider, the more effective the internal capital market will be (3)The proportion of independent directors and internal capital market efficiency are positively correlative. It proves that individual board plays a due role of governing, which is useful to stop the shareholders emptying companies by internal capital market, to improve the internal capital efficiency.