The Research On Internal Capital Market Efficiency Of Enterprise Groups In China

Resource allocation efficiency is an important and basic research direction in economics.As an important resource,capital efficient allocation is vital in economic development.As vital part of social capital allocation,Internal and external capital markets have important influence to both a group or social economic development.And for developing country,internal capital maybe more important because of their economic phase and scale.Although the internal capital market theory has been a hot research field,but the research result of internal capital market is inconsistent.In recent decades,conglomerates built through mergers,acquisitions and restructuring have become the mainstay of the world economy.With decades of years of development in China,the business groups built through merge and acquisition have been the quite large in our economy.Some groups,such as “Tomorrow Group”,“China Resources”,“Fosun Group”,has been developed through merge after their holding company is large.And the internal capital allocation between corporate headquarters and subsidiaries have been noticed.These enterprise groups use the internal market to expand rapidly,and the enterprise value is improved rapidly.But at the same time,many large companies that have been at the forefront of development have been eliminated in the fierce competition.Choosing appropriate development strategies based on the development background of enterprises and optimizing capital allocation has become an important issue for the development of enterprise groups.This paper analyzes the operation and development of the internal market within groups.And based on Chinese faction enterprises,we have empirical evidence to analyze the efficiency of internal capital market in those groups with theoretical analysis and empirical research method.In the end,we raise several recommendations according to the research findings.