State-owned Business Groups、Internal Capital Markets And Investment Efficiency

Business groups emerge a little late but develop very fast in China, which should be attributed in large part to the government’s vigorously promote. As to say, construction of a number of large business groups is also an important measure of state-owned enterprise reform process. Business Group is headquartered at the core, gather a number of independent firms, implement unified management, and internal capital allocation between member companies. Business groups are not only the intermediary between external market and independent enterprises, but also the intermediary between government and independent state-owned enterprises.The basic features of business group formed is internal capital market. Through internal capital market, business group can make fund allocation and financing. Thus, it can play a role of optimizing the allocation of capital and improving investment efficiency. But there may be risk of improper configuration and investment inefficiency. Based on this, other features of business group, such as diversity and pyramid level can influence capital allocation, thus make positive or negative effcet on investment efficiency. Therefore, we should treat the investment efficiency of business group in a dialectical view, and understand in depth various influence on investment efficiency that business group may generate.Basic on transaction cost theory, internal capital market theory, principal-agent theory and asymmetric information theory, this thesis chooses the SOEs that alliliated business group listed in Shanghai and Shenzhen Stock Exchange during2011to2013as research object, from the members’ cash flow "interaction", the degree of diversification of the group level and the members’ pyramid level three areas to research impact on the members’ investment and investment efficiency under the group mode. Conclusions of this study indicate that:(1) In the state-owned enterprises, subsidiaries in the group accounted for over80%of the sample companies. This confirmes that the vast majority of companies have group background, and this form of organization is very popular in our country;(2) Of the choosed2120sample, the1138sample companies have excessive investment behavior, the presence of982sample companies have under-investment behavior, this indicate that in state-owned enterprises, the over-investment problem is relatively more serious;(3) one listed member firm’s investment level is highly correlated to its own cash flow levels, but have weak correlation to the level of other members’cash flow;(4) Diversity have significant positive correlation with over-investment, and diversification expansion of the group level increased over-investment level of its member companies, but diversity don’t have significantly affect on the level of under-investment;(5) Pyramid level and over-investment have significant negative correlation, indicating that in the state-owned enterprises under the control of the group, the pyramid levels can suppress the occurrence of over-investment in some degree, but pyramid level can not significantly affect the level of under-investment.At last, based on the findings, this thesis gives some policy recommendations for the state-owned business groups’ investment efficiency problem:(1) Further deepen the reform of state-owned enterprises;(2) Bulid business groups in scientific manner, and take advantage of the internal capital market;(3) Strengthen information disclosure and supervision of internal capital allocation within business group;(4) Moderately diversifing;(5) Use the favorable advantages of the pyramid structure reasonably.