Cash Distribution,Institutional Investors' Ownership,and Internal Capital Market Efficiency

With the increasing popularization of the group-based listed companies,the more complicated financial and accounting issues within the group have drawn more and more attention from the theoretical researches at home and abroad.In recent years,exploring the group's internal financial and accounting behavior based on the dual agency relationship and "double disclosure system" is the frontier of the group's financial and accounting theory research.Different from a single company,the collection and allocation of resources through the internal capital market constitutes a unique feature of the group-listed company.Correspondingly,the internal resource allocation efficiency problem is the core of the internal capital market theory research.When searching the internal resources allocation and principal-agent problems of enterprise groups(or group-based enterprises),the existing literature mostly confines the influence of the superior control chain of listed companies on the overall performance of listed companies.However,the research on the capital allocation efficiency of the internal control chain of listed companies is rare.As the focus of corporate financial resources allocation,the distribution of cash between the parent company and subsidiary company in a listed group manifests the control of financial resources at headquarters.Then,the level of cash distribution at the parent company level will affect the efficiency of the internal capital market of listed companies in the future? If so,what is the mechanism of action? There is little literature on this concern.It has always been a controversial topic for institutional investors to play a proper role in the external supervision and internal governance of listed companies.Under the theory of corporate governance of internal capital market theory,whether institutional investors hold shares has an impact on the operation of the internal capital markets of listed companies? Can institutional shareholders play a role of channel in the relationship between cash distribution and resource allocation efficiency? Further,in the context of different nature of equity and information transparency,whether the previous conclusion is different? The above problems have not been supported by the literature of theoretical research and empirical research.Based on the cash distribution of parent-subsidiary companies,this paper discusses the degree of cash distribution in listed companies and the effect,mechanism and situation of institutional shareholders on the operating efficiency of internal capital markets in the future.Using the data of H-share group multinational companies listed in 2010-2016 and using "double disclosure system",through theoretical deduction and empirical test,this paper draws the following conclusions:First,under the condition that the overall cash level of a listed company is certain,the more cash is dispersed at the subsidiary level,the easier it will be for the listed company's future internal capital market to operate ineffectively.When a large amount of cash is scattered at the subsidiary level,it means the weakness of the parent company.The weaker the parent company controls and allocates the financial resources,the more likely it will lead to the lack of efficiency of the listed company's internal capital market in the future.Further research shows that this negative impact is more serious when the information transparency of local state-owned and non-state-owned conglomerates and listed companies is low.Second,the higher the proportion of institutional investors in public companies in listed companies,the more conducive to the effective operation of their internal capital markets.Further,the increase of institutional investors' shareholding ratio is more obvious for the efficiency of internal capital market of non-state-owned group listed companies.When the information transparency is high,the positive effect of the institutional investor's shareholding plays in the internal capital market efficiency of listed companies is stronger.Thirdly,the higher holding level of institutional investors can reduce the negative impact of the decentralization of subsidiaries on the efficiency of the internal capital markets of listed companies.Further,this optimization effect is more prominent in non-state-owned group listed companies.This article provides new results for the study of internal capital market under the double principal-agent field of view and provides new empirical evidence for the "shareholder activism" theory of institutional investors.