Analysis On The Optimal Boundary Of The Internal Capital Market In The Enterprise Group

Internal capital markets for relief external capital market of enterprise credit constraints of an option that is exists boundaries. The enterprise group's internal form of capital market has advantages with lower transaction costs, effective supervision, optimize capital allocation, relaxation external financing constraints etc. From resource heterogeneity Angle, internal capital markets reate excess value through the integration of internal various resources (human capital resources, information resources, financial resources, relations resource) for enterprise group . From the system arrangement Angle, internal capital markets can optimize the allocation of resources and improve the capital allocation efficiency. But internal capital markets is a centralized financing hierarchical organization which attach to the multilayer level enterprise whose structure made of internal capital markets principal-agent also presents the multi-stage level, this will cause a series of problems: the complex agency relationship necessarily causes high agency cost; Asymmetric information may make division manager waste more time and energy to master control in the parent company manager for the remaining rent-seeking activities, causing the efficient divisions investment is insufficient or invalid division excessive investment.So beyond a certain scale of internal capital market will reduce the operational efficiency of the enterprise group as a whole. This article through mathematical model analysis under various conditions of internal capital market with investment returns and the cost of capital and derived the determination of internal capital market boundary. So we determine the optimal number of the enterprise group which has functions of internal capital markets。...