The Research On Financial Coordination Effect Of The Internal Capital Market And Value Creation

The mid-20th century, a large-scale wave of mergers and acquisitions in theUnited States, the formation of a number of enterprise group mainly by way ofdiversification, in the process of transforming single business model to businessdiversification direction, gradually formed an internal capital market. For our part,along with the deepening of China’s reform and opening up and socialist marketeconomy, promote the formation of enterprise groups and diversified. Some studieshave shown that, relative to external capital markets, internal capital markets to easefinancing constraints, reduce financing costs, optimize the internal allocation ofresources and other effect. Financial coordination of internal capital markets as wellas the internal capital market effects and corporate value relationship become a hottopic of research of academics and practitioners. Therefore, to study the efficiency ofthe internal capital market in China, the intrinsic link between research the financialcoordination effect and value creation of the internal capital market has a veryimportant significance.This paper first on the internal capital market research results at home andabroad was summarized, and the internal capital market concept, characteristics,efficiency and other relevant theoretical analysis, and from a new perspective, basedon the internal capital market financial coordination effect, and its basic theory,function and effect on detailed analysis, as well as the financial coordination effecteffectively play the process is also the enterprise value creation process. Finally, anempirical study vertically integrated business enterprise group. By empirical research,found that the number of enterprise groups in China is not a reasonable use of theinternal capital market to play its role to enhance corporate value，while recognizingthe validity of agency costs, rent-seeking, egalitarianism and associated fundingoccupier，large shareholder expropriation of minority shareholders interests, emptiedof listed companies and other phenomenon, some empirical results discount.Finally, run for enterprise groups in China, and the existing problems, theproposed improvement measures for rational use of internal capital markets, and tosummarize this article shortcomings as well as the outlook for the future research.