Research On The Efficiency Of Internal Capital Market In Harbin Pharmaceutical Group

As the external market is not fully effective, information asymmetry, transaction costs and other factors affect the business financing from the external capital markets. The Enterprise Groups, in particular, China’s state-owned enterprise groups have the motivation of formatting internal capital markets and making use of internal capital market advantages to finance companies. In this paper, we take Harbin Pharmaceutical Group Holding co.,ltd. (thereinafter referred to as "HPGC") as an example and study the efficiency of internal capital markets of the case. We want to know how the internal capital market of HPGC dose and its impact on the enterprise value. Surely, we also hope to identify the effective practices of the internal capital market allocation and the inadequacies of it, through the comprehensible research on branch companies of HPGC. Finally, we build an efficient internal capital market model, which we expect to help China’s state-owned enterprise groups to set up such internal capital markets and make them efficiency.