The Correlation Study Between Corporate Governance Structure And Internal Capital Markets’ Allocation Efficiency In Transportation

In the modern economical social efficiency of resource allocation has been a hot researchtopic in theoretical circles. A complete capital allocation process involves two aspects. TheFirst one is solving the problem of funds’ configuration among different enterprises byexternal capital markets. The Second is the flow of funds and the allocation of capital throughinternal capital markets. Internal capital markets and external capital markets arecomplementary and inseparable in the capital allocation process, ignoring any of them willreduce the efficiency of capital allocation. The research of Allocate efficiency of externalcapital markets has been to a relatively mature stage. But the research of the second part isstill in its infancy; especially the research on the transport industry is still in the blank stage.Therefore, the paper starts from the perspective of the corporate governance structure,analyzes the status of internal capital markets within the transportation industry. Throughempirical research methods, the paper studies correlation between the proportions of thelargest shareholder, the management stake, the proportion of independent directors and theinternal capital markets’ efficiency in the transportation industry. The study found that theproportions of the largest shareholder negatively correlated with the efficiency of the internalcapital markets’ allocation. Scilicet controlling shareholder reduce the allocate efficiency ofthe internal capital markets, mainly because of the high ownership concentration in thetransportation industry. Zero holdings of the management in the transportation industry arewidespread. Because lack of effective management incentives, the management did not play arole in promotion to the allocate efficiency of the internal capital markets. Although transportation industry established the independent directors, but they are unable to promotethe allocate efficiency of the internal capital markets.Base on the results of the analysis, this paper provides relevant recommendations for thetransport industry, with a view to improving the internal capital markets’ efficiency in thetransport industry and enhancing the corporate value.