The Diversification And The Efficiency Of Internal Capital Market In China’s Security Industry—Based On Experience Data From Listed Security Company In Hong Kong

The development of Chinese securities industry in Hong Kong and the Mainland has obvious difference. Securities firms in the mainland delivered into two types, including comprehensive securities and professional securities. The securities industry in Hong Kong has a long history, the market is more mature. With communicate between two regions going further, the overall development of the securities industry has been promoted, together with competition. While the external market is not blameless enough, the domestic companies need to seek internal capital market efficiency, which can reduce the cost of corporate finance, promote internal supervision and motivation, and improve business efficiency.The present study of the internal capital market efficiency and diversification of securities industry are limited, this paper described the condition of diversification security industry, studied the relationship between diversification and internal capital market efficiency and provided a basis material for further study of Chinese securities industry.During theoretical analysis and empirical method of combining, this paper listed related theory of diversification; the relationship between diversification and internal capital market efficiency. After defining the main concept, this paper proposed hypothesizes according to theoretical analysis. At first, through a comprehensive analysis about theory about diversified operation causes, this paper puts forward to the research hypothesis. The empirical result proves the existence of the internal capital market in China’s securities industry. Then this paper gives a comparison of securities industry in Hong Kong and the mainland. In the end of this paper, it gives the conclusion and draws some suggestion about the further development of China’s securities diversification and internal capital market operation efficiency.Dealing with the huge pressure of market competition, securities companies in Hong Kong have neither obvious market advantage, nor the economic strength like the banks. Under the hard external financing environment, companies need to seek internal domestic capital market efficiency, thereby reducing the cost of corporate finance, promote internal supervision and motivation, and improve business efficiency.