Research On The Internal Capital Market Operation And Efficiency Of The Private Enterprise Group

In recent years,China’s market economy has been rapid development than ever before,with a large number of mergers and acquisitions,reorganization of behavior,private enterprise groups emerged and gradually developed into China’s main force of economic growth.However,due to the late start of China’s capital market,private enterprises are facing strict restrictions in the securities market,as the same as in credit markets,in this case,the emergence of internal capital markets to a certain extent alleviated the situation of poor financing.Many enterprise groups have built internal capital market,through more and more diversified mode of operation to play its mitigation of external financing constraints,optimize the capital allocation,supervision incentives,industrial integration and other functions.However,due to the China’s financial market is not perfect,the investor protection mechanism is weak and the group preferred pyramid ownership structure,resulting in the group’s financial decision-making is not independent,corporate funds were encroached,the interests of small and medium-sized shareholders damaged,the efficiency of internal capital allocation reduced,business group risk increased and so on.Therefore,it is of more and more practical significance to standardize the operation of internal capital while giving full play to the role of internal capital market.Based on the above situation,the article starts from the internal capital market of the private enterprise group,on the basis of combing the domestic and foreign research results,the Wanxiang Group Company(hereinafter referred to as "Wanxiang Group")as an example to the private enterprise group internal capital market The paper analyzes the effectiveness of the internal capital market by Adjusted Profit-Sensitivity method,and concludes with the conclusion that the internal market is effective but the efficiency is low.Finally,this article puts forward some suggestions on the cause of the phenomenon.Specifically,the article mainly includes the following three parts.First of all,the article expounds the background and significance of the topic,reviews and summarizes the relevant theories about the domestic and foreign research results of operation mode and efficiency of the internal capital market,and discusses the research ideas and methods.Secondly,the article elaborates the concept and function of the internal capital market of the private enterprise group,sums up the internal capital market efficiency measurement method,and summarizes the theoretical basis of the research on the internal capital market,providing the theoretical basis for the case study.Finally,by using the case analysis method,this paper describes the construction process and operation mode of the internal capital market of Wanxiang Group,adopts the Adjusted Profit-Sensitivity method to measure the efficiency of its capital market,and make the results of the internal capital market of Wanxiang Group is effective but the current efficiency is still low.Combined with Wanxiang Group operating performance analysis,this paper studies the reasons and finally puts forward the effective recommendations to increase the efficiency of the internal capital market.All in all,this paper uses the case study of the private enterprise group’s capital market operation mode and efficiency,aimed at standardizing the operation of internal capital market and providing useful advice to enhance the efficiency of the internal capital market.