Study On The Effects Of Management Incentive On Internal Capital Market Allocation Efficiency

Internal capital market in China is in the key transition period, that is from an immature market transition to a mature market. On the one hand, the internal capital market provides a resource well and fast access platform for enterprise group, For example, the internal capital market relative to the external capital market can alleviate the financing pressure. On the other hand, the internal capital market still exist many problems hindering the economic transformation, for example, the internal capital market managers’ rent-seeking behavior. Under the condition of limited resources, department manager will try to seek more resources for their own department, and deception superiors and other means to fight for resources. In addition, because of the position relationship, managers have information content relative to others, and the outside people of the enterprise internal have less channel to get information acquisition caused the problem of asymmetric information. Managers may use his position for his own profit regardless of the overall interests of the company, Only after meeting the personal interests, managers will consider whether the effective allocation of inter capital market.This paper first reviews the relevant literature, then we define the related concepts and theories of internal capital market. According to the current situation of dispersed ownership, incomplete law in China, the main reason I analyze the influence of internal capital market allocation efficiency is the problem of dual agent, that is the agency problem and the agency problem of ownership and management level. The main reason for the agency problems affect the efficiency of internal capital markets is the manager’s goal divergent from the overall interests of the enterprise. To solve the agent problem brought negative influence, we must seize the root problem, that is the managers. Only by relying on the management incentive, can make the managers and enterprises having the same interests, as far as possible to improve the allocation efficiency of internal capital market. Therefore, according to the impact of managerial incentive on internal capital market allocation efficiency, I put forward hypothesis. Then, to further clarify the internal capital market allocation efficiency is effected by management monetary incentive, equity incentive, on-the-job consumption incentives, promotion incentives and other factors, put them into a multiple linear regression model as explanatory variables for analysis. Then through empirical analysis to verify the hypotheses and I make a general overview of the impact of managerial incentive on internal capital market allocation efficiency. Combined with the results of empirical model, the author finally puts forward a series of raising the allocation efficiency of internal capital market in China listing Corporation policy recommendations and future study direction.