Group Diversification?Property Right And Efficiency Of ICM

China has witnessed rapid growth of financial market,groups which control a number of listed companies continue to emerge.In order to finance more easily and integrate assets,the group often make it's subordinate companies listed or control the listed companies by investing.The single form of enterprise main body has gradually been replaced by the parent company and multiple legal entities,the Group's business more and more subsided to the subordinate companies,these new operating characteristics could have influence on the internal capital market efficiency.However,the existing studies are mostly on the relation of diversification and efficiency of capital allocation which have been carried out under the framework of a single subject,exploring the diversification of member enterprises.Few scholars pay attention to the structural characteristics between group and member firms,study the relationship among the characteristics of intra-group's business distribution,diversification,property rights and the internal capital market efficiency.The research on capital allocation efficiency is only at the level of member firms.It does not combine the diversification of the group with the diversification of member firms to study the relationship between diversification and internal capital market efficiency.In view of the shortcomings of the above studies,from the perspective of the characteristics of group enterprises,this paper combines the diversification of group operation with the diversification of member companies,and uses related theories,empirical proof to explore its impact on the efficiency of group capital market.This supplement the existing studies.Furthermore,from the agency point of view,we explore what cause the differences in group internal capital market efficiency under different ownership constraints.The results of this paper are as follows:(1)The internal capital market of Chinese enterprise groups is generally effective.(2)The degree of diversification is positively related to the internal capital market efficiency at the group level,and the degree of diversification at the member level is negatively related to the internal capital market efficiency.(3)Compared with enterprise groups whose the ultimate controller are the local government,internal capital market efficiency of groups which controlled by private groups and the State government is higher.(4)For the enterprise group controlled by the local government,the diversification of group is relatively lower,and the positive effect of diversification level on capital allocation efficiency is weakened.This paper's main points are as following:(1)Directly study the relationship between group diversification and internal capital market efficiency,rather than with enterprise performance or value;(2)take the diversification of group and the diversification of member companies into consideration,and study their impact on the internal capital market efficiency respectively.(3)Consider the agent view,we analyze the reasons that the diversification of the group has different influence on the internal capital market efficiency under different property rights.So as to expand the existing theoretical research of diversification and capital allocation efficiency,then to provide some empirical evidence on enterprise groups and their member companies' capital allocation strategy and business model.The contributions of this paper are as follows:(1)It provides empirical evidence for the relationship between diversification at the group level,diversification at the member level and the efficiency of internal capital market;(2)the results of empirical analysis have important practical significance on the capital allocation strategy of enterprise group and its member companies,business distribution,business model development.The research of this paper has some reference significance to the merging and reorganization of state-owned enterprises and the reform of state-owned mixed ownership.