Research On The Capital Market Efficiency Of Hengdian Group

The concept of Internal Capital Market has been put forward for a long time.It mainly exists between the parent company of a large group and its subsidiaries.Compared with the External Capital Market,it has advantages in information acquisition and capital allocation,and can respond quickly to the investment division with outstanding performance within the group and increase capital expenditure on it,which is also a good performance of the operation efficiency of the Internal Capital Market.With the further development of market economy,private enterprises in China are playing an increasingly important role in the overall economic structure.In order to alleviate the external financing pressure,some large private enterprise groups began to explore the effective establishment of the Internal Capital Market to achieve effective financing within the group.However,because our country is still belong to emerging markets,in the company information disclosure system,middle and small shareholder protection system etc to be perfect,internal shareholders encroach on minority shareholders' rights and interests,such as investment decision-making errors occurring phenomenon occurs frequently,which cause to our country private enterprise group's Internal Capital Market thinking: 1.whether our country private enterprise group internal set up effective Internal Capital Market,its running condition of Europe and the United States there is a gap compared with developed countries? 2.in China's specific background of the Internal Capital Market,the group capital has been effective allocation? 3.what are the specific factors influencing the operation efficiency of the Internal Capital Market of China's private enterprise groups?Therefore,this paper selects Hengdian Group as a typical representative of China's traditional large and medium-sized private enterprises,and takes the operation of its Internal Capital Market as the entry point.Firstly,it analyzes the development status and representativeness of Hengdian Group's Internal Capital Market.Secondly,the efficiency of Internal Capital Market is measured by adjusting profit sensitivity coefficient.Then,combined with the status quo of China's private enterprise structure of its impact factors are analyzed.Finally,some Suggestions about the effective operation of Internal Capital Market are given from the inside and outside of the group.The main conclusions of this paper are as follows: first,the Internal Capital Market of China's private enterprise groups is existed,but the efficiency is generally low.Compared with the efficiency index above 0.7 in western developed countries,the highest allocative efficiency of Hengdian Group is only 0.008249,which is sometimes negative and unstable,and still needs to be improved.Second,many influence factors to the Internal Capital Market,private enterprises pyramid structure brought about by the problem of "double agent" and cash flow rights and control problem of "two rights separation" and group had intensive public plan would lead to the internal financing decision,capital flows frequently growth ability of underperforming division.Third,according to the existed theories,the diversification development of the group plays a role in promoting the effective operation of the Internal Capital Market.However,after the introduction of the diversification index for calculation,this paper finds that there is no significant linear relationship between the diversification index and the efficiency index of the Internal Capital Market in the case of high degree of overall diversification.Based on the above conclusions,this paper puts forward some policy suggestions to cope with the low efficiency of the Internal Capital Market of China's private enterprise groups.The second is to improve the enterprise division information disclosure system to maximize the Internal Capital Market to obtain information advantage;Thirdly,we should improve the external regulatory environment and realize the complementary functions of the internal and external capital markets.