| External capital market's financing constraints have imposed limitations onthe development of the enterprises, while the internal capital markets served as anexternal capital market's complementary mechanism of formal system become animportant factor which promotes the value of the enterprise's growth, and at thesame time boosting the rapid development of the macro-economy.“Corporateclasses” were born in the process of economic transition while the system of theexternal capital market is not perfect,“corporate class”, as a form of internalcapital markets, can make the investment projects within it to evade from theexternal capital markets, relating to information acquisition and incentiveproblems, achieve reasonable allocations of resources and efficient operations.As a result, the effectiveness of the internal capital market is closely linkedwith the growth and development of "corporate class". The deep analysis ofinternal capital market resource allocation mechanism, characteristics, influencingfactors and the value of the affiliated enterprise growth process contributed toputting forward reasonable suggestions which promote the efficiency of internalcapital markets. This article takes the listed companies of the corporate classes asresearch samples, and emerging markets and the transition period of our country asthe research background, by collecting the relevant financial data of corporateclasses members listed from1991to2011, according to Fan Gang and WangXiaolu (2007-2009), degree of marketization index and financial sectordevelopment index data, regarding affiliated members within the IPO as thebreakthrough point, making empirical survey on the existence, allocationefficiency and operation mechanism of the diversity/integration internal capitalmarkets, trying to explain the internal mechanism of value conduction. In thisarticle, the research mainly includes the following several parts:Firstly, this article combs the developmental path of internal capital markettheory, and it describes the operation mechanism of internal capital marketconstructed by the corporate classes, from such aspects as the emergence anddevelopment of internal capital market, the cause of formation and basic features of the corporate classes and the allocation of resources as well as the capitaloperation of the internal capital market. Then, it further discusses the correlatedliterature that refers to the efficiency of the internal capital market and impact onthe group value growth influenced by different strategies adopted by enterprisegroups. Then, based on that, this paper concludes the related literature aboutoptimizing scale of capital market and measuring configuration efficiency model.These three parts provide a great theoretical foundation and support for the laterexploration of the differences and connections among all ethnic kinds of internalcapital markets. At last, the IPO phenomenon is summarized, and relativedocuments about it on different connected subjects are sorted out. The existingresearches have carried out extensive discussions about the phenomena ofcorporate classes and the mechanism of internal capital market and itseffectiveness, which provide valuable experience for reference and lay a solidtheoretical foundation for this paper.Secondly, we have studied the allocation efficiency of internal capital marketwithin corporate class in this paper. Among the emerging market economycountries, the imperfection of the external capital market and the financingconstraints add advantages to the internal capital market, and the existence of theinternal capital market is a beneficial supplement to the limitation of the externalcapital market. With the overall deepened reform of our country's economicsystem, the decisive function of the market in allocating resources stands outfurther. Based on the ICM theory, corporate control theory, information asymmetrytheory, pecking order theory of financing and principle-agent theory, this articlewill carry out further analysis and discussion on a series of relevant issues, forinstance, whether the intra-group capital market will lead to an effective capitalallocation or not? Is it a kind of creation or destruction to the enterprise value? Wewill analyze and discuss a series of relative questions later on.Thirdly, the above researches show that capital market exists within enterprisegroup and most of its deployment of assets is efficient. As a specific way forenterprises to realize their visions, strategy accompanies enterprises in everyperiod of the life circle of them. Therefore, we use the IPO event as a starting pointto review whether this event has any spillover effect on other listed companies within the family. Then we make further discuss on whether different strategiesadopted by private enterprise groups will make difference on the operation andallocation of its internal capital market.At last, based on the research mentioned above, in terms of the strategicmanagement theory, the ICM theory, the information asymmetry theory and thelike, this article further excavates the reasons that cause the member enterpriseIPO's spillover effect to the corporate classes, as well as the specific influences onthe whole corporate classes and other internal members that have come into themarket, and distinguish among different strategies with analyses anddemonstrations.This article applies an empirical approach to the study and the followingbasic conclusions are come up with after the research:1. The existing literatures have conducted an extensive research on the issueof whether the resource allocation of the internal capital market is effective fromdifferent angles and achieved fruitful research achievements. However, currentresearches mostly focus on the imploration on the resource allocation efficiency ofthe internal capital market of single enterprises. With the diversification of groupenterprises and the existence of specialization strategy, part of the literature beginsto turn to the research on the relationship between the group enterprise strategyand capital allocation efficiency, but it is not common. In addition, IPO is notunfamiliar to private enterprises but no scholars demonstrate or analyze theeconomic consequence that the IPO of member enterprises will bring to privateenterprises, and ignore the factor that the influence of changes in external capitalmarket efficiency on internal capital market efficiency etc. Therefore, based oncurrent research, this paper starts with the allocation efficiency of group internalcapital market. Using the factors like IPO events of group internal memberenterprise, business strategy taken by the group and the cross-listing of memberenterprises etc, the paper analyzes the influence on the allocation efficiency ofgroup internal capital market and the value of group and member value from manyangles, attempting to sort out the allocation behavior of family corporate's internalcapital market and the path and mechanism of its value increase in our country,providing policy advices for supervising expropriation and opportunism behaviors of giant shareholder in the internal capital market.2?Referring to Shin&Stulz (1998) and Wulf's (2009) model to measure theexistence, allocation efficiency and its influencing factors of internal capitalmarket of corporate classes in China. The study found that there existing internalcapital market in corporate classes in China. Under the influence of differentexternal environment and internal characteristics, the efficiency of internal capitalmarket is different too. Located in the higher marketization, better investorprotection, and more sound legal regulation system, the internal capital marketallocation is more efficient; compared with non-state corporate classes, due to amore convenient external financing channels, but also shouldering the socialstability, promoting employment, social security and other kinds of socialresponsibility and political mission, therefore state-owned corporate classes'sinternal capital market allocation efficiency is higher; in state-owned propertyrights of the corporate classes, the central control system group is more perfectthan the local control system of internal capital market, and the configuration ismore efficient; cross-listing, moreover, because of its lower transaction costs andthe ability raise more capital and reduce the degree of information asymmetry, somembers cross-listing contributes to improving the allocation efficiency of internalcapital markets of corporate classes.3?To distinguish the diversity/integration strategy of corporate classes,respectively investigate the IPO spillover effects on the corporate classes of shortterm and long term. Study found that, with the cumulative accumulative returns(CAR) measuring the affiliated members' spillover effects generated by the IPO inthe short term, the overall market performance of corporate classes is negative, andthe CAR value is negative; and state-owned CAR value is lower, while thenon-state corporate classes market's performance is better, this may be related to theprice effect in the stock market, IPO underpricing and signal transfer effect and soon; IPO has negative spillover effect on the diversification strategy and horizontalintegration system, non-state corporate classes does better under the horizontalintegration strategy; investors have more confidence on the non-state corporateclasses, vertical integration strategy in which spillover effects change from positiveto negative. By measuring the enterprise IPO long-term spillover effects with the overall value of affiliated members we found that diversification strategy offers thelargest contribution to the overall value promotion, followed by is the horizontalintegration while the vertical integration strategy can promote state-ownedcorporate classes' value mostly, on the contrary offers deduction effects fornon-state corporate classes' value. In addition, the IPO has greater promotion tovalue of the state-owned corporate classes than the non-state corporate classes; theIPO of the affiliated members within the corporate classes which has crossed listedcompanies can better promote the overall value of lineage than the non-listed.4?Because of the change of the overall value of the corporate classes canbetter reflect the intrinsic value of the stock fluctuations, thus to explore the causeof the long-term spillover effect can acquire a better knowledge of thecharacteristics and operation mechanism of internal capital markets.Study shows that the degree of information asymmetry is the main factorwhich influences the WACC of the corporate classes of diversification strategy; thespillover effect of IPO is caused by reduction of information asymmetry's degreeand meanwhile leads the reduction of the cost of capital. And in the corporateclasses of vertical integration strategy, the game ability of the affiliated membersbetween the upstream and downstream partners within corporate classes is the mainfactors which affect the future development, it has been verified by analysis,turnover ratio of accounts receivable is the main factors that affect the level ofcorporate profits, and turnover ratio of accounts payable's effect is not obvious,which shows that the sooner the enterprise collect accounts from their customers,the better the capital's liquidity is and the ability of the enterprise paying debtsenhances, but has a weak ability to have the access to the supplier's capital for free,therefore the reduction of transaction cost is the main reason which caused themembers' IPO to the vertical integration strategy's spillover effects; in the corporateclasses of horizontal integration strategy, IPO companies have obvious informationeffects on affiliated members, which is the main factor that cause long-termspillover effect.This study will not only help to interpret and perfect the mechanism andinfluencing factors and the channels of improvement of internal capital marketallocation of resources of corporate classes during our country's economic transition period in theory, and to promote the value growth of corporate classes ofdiversification/integration, perfect the internal governance structure, improve theefficiency of the internal and external capital markets and provide importantreference to promote macroeconomic stable growth in practice. |
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