Empirical Research On Efficiency Of Listed Company's Internal Capital Markets

China's capital market offers the listed company a platform for raising capital and optimizing resource. The external capital market is not always efficient, because of the restriction of market disposition by government, the low liquidity of capital market, the low efficiency of getting information and asymmetric information inducing inverse choice and moral hazard. Under this background, the listed companies often spontaneously build the internal capital market (ICM). In fact, building ICM by the related party transaction is very common in China's capital market. Therefore, it's extremely important to study the efficiency of listed company's ICM.First of all, the paper looks back on the relative literature. Then, it confines the listed company's ICM, and offers new method of measuring the listed company's ICM by the related party transaction. It establishes basic thought that the listed company's ICM is efficient if the operation of which can increase the firm value, in reverse, the listed company's ICM is inefficient. Based on the orientation, mode and intent of related party transaction, the paper classifies the listed company's ICM, and brings forward a hypothesis that different types of listed company's ICM are different in efficiency. Furthermore, the paper introduces shareholding character to bring forward another hypothesis that for different shareholding characters, the listed company's ICM are different in efficiency. At last, applying the method of empirical research, the paper designs the model of efficiency of listed company's internal capital markets. After descriptive statistic and multiple regression analyses, it demonstrates the efficiency of listed company's ICM and makes a concrete analysis of the reason and condition of efficiency or inefficiency.Research proves that China's listed company's ICM is inefficient, on the whole. Based on the empirical conclusion and relative analysis, the paper makes some suggestions for policy consideration on how to improve the efficiency of listed company's ICM.