A Research On The Efficiency Of Internal Capital Market From The Perspective Of Ownership Structure

On the conditions of China’s transition economic and the emerging markets, laws andregulations system is imperfect due to the external capital market imperfections, the company issubject to external financing constraints, they can not get adequate funding from the externalcapital market, so the effective use of internal capital markets (ICM) is particularly important.Corporate governance structure is the operation environment of ICM, and ownership structure is atop priority in corporate governance. However because of the imperfect ownership structure andcorporate governance issues, ICM is inefficient or ineffective, eventually leading to bad businessperformance. In view of this, we need to radically improve the ownership structure and improvethe ICM efficiency and to improve corporate value.This paper attempts to explore that how the ownership structure affects ICM, from anew perspective, divided the ownership structure and then analyze the role of ICM.First, review the relevant literature, followed by theoretical analysis existence of ICM structureand operation mechanism. Pointed out that ICM exists in almost all of the enterprise. Ownershipstructure determines the corporate governance structure, thereby affecting the internalcapital market efficiency. The next focus of analysis is how different levels of ownershipstructure affect the internal capital market efficiency. Ownership structure divided into thecontrolling shareholder, the external major shareholders, institutional investors andmanagement, coupled with the ultimate in top-level control of the control chain of people, inaccordance with shares of the holder. Based on theoretical analysis, proposed the researchhypothesis. To verify these hypotheses, select the information technology industry as arepresentative. Information technology industry as high-tech enterprises, with small businessesand large uncertainty future development, the supply of external capital markets is limited fromECM, so this industry will take advantage of internal capital market, rational allocation of funds,ICM will tend to be more effective. In this paper, there are two empirical models. First model isto analysis the internal capital market efficiency, evidence draw that capital markets are efficientinternal information technology industry. Second, modeling between ownership structure andthe internal capital market, analysis and test ownership structure affect the value of internal capital markets, draw conclusions: the relationship between controlling shareholders and the efficiencyof ICM is non-linear,"U" shape; the external major shareholders and institutional investorsholding have a positive correlation with internal capital marketefficiency; management’s shareholding ratio is low, and has a negative correlation with internalcapital market efficiency; it is a negative correlation between the separation coefficient of theultimate controller and the internal capital market efficiency.According to the relevant analysis and empirical findings made some policyrecommendations to promote internal capital markets effective at the end.