Research On The Allocation Efficiency Of ENN Group’s Internal Capital Market

Since the 1960s,the United States set off a wave of large-scale mergers and acquisitions,and the group companies became more and more diversified.In such an environment,diversified group companies gradually come into the eyes of many scholars and arouse their attention,hence the birth of the concept of internal capital market.In large enterprise groups,the internal capital market plays an important role.If an enterprise group wants to survive and develop smoothly,it cannot do without the rational operation of the internal capital market.In the context of the continuous improvement of China’s socialist economic system,the rapid development of China’s private enterprises,the scale of the expanding,the demand for funds is also growing day by day;For China’s private enterprises,external financing is more difficult.In such an environment,the role of the internal capital market is increasingly prominent.Therefore,it is of great practical significance to study the allocation efficiency of internal capital market in the view of external environment,corporate strategy and operation of internal capital market.Since its establishment,ENN Group,the case company studied in this article,has been focusing on its main business,striving to build a clean energy industry chain,and has made certain achievements in related fields.And a complete internal capital market system including ENN Finance Co.,Ltd.and Hebei Financial Leasing Co.,Ltd.has been formed.ENN Group entered the software and information technology service industry in 2018.It is no longer a trivial mess,but for the first time officially stepped out of the entire clean energy industry chain and began diversified development.This provides a typical case for the in-depth study of the internal capital market allocation efficiency of my country’s private enterprises.In general,this article consists of five parts:The first part is the introduction,focusing on the research background and significance,and reviewing the connotation of the internal capital market,the operation mode and effectiveness of the internal capital market and other related literature.Summarizing the research conclusions and deficiencies in the literature,then proposes the research ideas and research methods of this article,and finally shows the basic framework of this article.The second part is a theoretical overview.This chapter mainly introduces the theoretical basis related to the internal capital market and the factors affecting the efficiency of the internal capital market,which lays a solid theoretical foundation for the following writing.The third part is an overview of case companies,mainly using case analysis to state ENN Groups organizational structure and the status quo of internal capital markets,and pave the way for the following analysis.The fourth part is the analysis of ENN Group’s internal capital market allocation efficiency.First,it introduces the operation of the company’s internal capital market;the selection of internal capital market allocation indicators;and then uses the adjusted profit sensitivity coefficient method to determine the efficiency of ENN Groups internal capital market allocation Perform calculations;then use cash holding indicators to reflect ENN Group’s internal capital market allocation efficiency;and finally conduct an in-depth analysis of the factors that affect the internal capital market allocation efficiency.The five parts are conclusions and prospects,and put forward suggestions for optimizing the efficiency of ENN Group’s internal capital market allocation,in order to provide experience and enlightenment for other private enterprises.Through analysis,this article finds that ENN Group’s internal capital market is inefficient,and there are some years of invalid allocation,indicating that ENN Group’s internal capital market has not been fully utilized.At the same time,the research conclusions also show that ENN Group’s internal capital market allocation does not take efficiency as the first principle;and its internal "financial platform" does not fully function.To this end,this article puts forward some practical suggestions:1.The allocation of internal capital market should prioritize efficiency;2.Improve the function of the internal capital market platform to give full play to its value at the beginning of its establishment;3.Rational development,moderate Diversification.