Empirical Research On The Efficiency Of Internal Capital Market On Ultimate Control Rights

Since Alchian (1969) and Williamson (1975) first proposed the concept of "Internal Capital Market", that the internal capital market is the efficient allocation of scarce resources within the enterprise as a mechanism, up to this date, it has become an emerging and hot research field at home and abroad. Although the domestic research about it late start, this does not hinder its rapid pace of development. In the context of the equity reform basically completed in 2007, combined with the development characteristics of China's capital market and phenomena of the high concentration of listed company shares, this paper trace the ultimate control of listed companies, study the underlying characteristics of complex control chain over the direct ownership, more completely, more comprehensively and truly reveal the shareholding structure, and discuss the internal capital market efficiency based on the behavior performance of the ultimate control, reflect the nature relationship each other, to achieve the true essence of the research results.This paper first reviews the relevant literature, defines the concept of internal capital markets in this paper, then clear the definition and boundaries of the ultimate control the text involved in, to the private benefits of control theory, free cash flow hypothesis (agency theory) and the internal capital market hypothesis three basic theoretical as a guide, in-depth analysis of the features of ultimate control on the impact of internal capital market efficiency, paving the way to empirical research hypotheses in four chapter. A highlight of the text is the measure of the internal capital market efficiency, learning the empirical measurement methods of the internal capital market efficiency from the domestic and foreign scholars, considering the situation of China's internal capital market and the acquisition of related data, selects direct measurement model based on the "method to the adjusted sensitivity of profits", measure the efficiency conditions of internal capital market using of segment reporting data.This paper selects 193 samples of Shanghai and Shenzhen A-share listed companies between 2008 and 2010, builds multivariate linear models, carries out the related description between variables and regression analysis (comparative analysis, one by one progressive analysis, etc.), shows a significant positive correlation between the ultimate control ratio, the ultimate cash flow rights ratio and the internal capital market efficiency; the internal capital market efficiency under the state ultimate control is better than that of the private control, but the superiority is not prominent. In addition, compared to the ultimate cash flow rights, the impact on the ultimate control, the separation of ownership and the proprietary nature on internal capital market efficiency is more homogeneous, the relationship between them is more significant.This study found, the separation of ultimate control rights and cash flow rights and the internal capital market efficiency is not significantly related, its dominant effect produces under certain conditions. In a given proportion of the ultimate control, the greater the separation degree of ownership, ultimate controller can control listed companies by the smaller cash flow right, because he only bears a small part of the risk and the costs of business failure, this time the motivation of empting or encroaching to obtain the control private benefits is more strongly, easily leads to the internal capital market lower efficiency; in the proportion of higher cash flow rights, because of the interest convergence of the ultimate controller with other shareholders, the target company bears the greater cost under the business failure, to facilitate it scientific and rational allocation of resources, promotes the effective operation of internal capital markets.