The Analysis Of Internal Capital Market Efficiency Of Brilliance Group

With the continuous development of the capital market,the imperfections of China’s external capital market are gradually revealed.More and more enterprises choose to construct an internal capital market to reconfigure group resources to alleviate the negative impact of the external capital market.However,it is also found that the internal capital market has invalid phenomena,such as excessive investment,low efficiency of cross subsidies,interest transmission and so on.So,w hether the internal capital market of China’s enterprise groups is effective or not,there is no unified conclusion in the academic circle.Therefore,this paper chooses Brilliance Group,a large automobile manufacturer with active internal capital market operation,as the case study object to analyze the effectiveness of its internal capital market operation from the perspective of the listed companies under the group and its parent company Brilliance Automotive.The case analysis is mainly divided into three parts:The first part introduces the general situation,business layout and management and control mode of Brilliance Group,and focuses on how Brilliance Group has built a large and diversified internal capital market through acquisition of several listed companies,spin-off and listing,diversified operation and joint venture with foreign companies.The second part,analysis of Brilliance Group internal capital market operation mechanism,effectiveness and influencing factors.First of all,the transaction data disclosed by the four listed companies of Brilliance Group are sorted out,and summarize the internal capital operation mode of Brilliance Group in six ways,such as internal assets or equi ty transfer,internal guarantee and so on.Then it analyzes the effectiveness of the internal capital market of Brilliance Group from two aspects: easing financing constraints and resource allocation.The internal capital market has the positive impact of supplementing the working capital of subsidiaries,improving the level of external financing and reducing the financing cost of enterprises,so it alleviates some external financing constraints,but also increases the financial risks of enterprises.In terms of resource allocation,the cash flow sensitivity method is used to measure the allocation efficiency of the overall internal capital market of Brilliance Group from 2015 to 2019.The results show that the overall allocation efficiency of Brilliance Gro up is effective and low at the beginning,and eventually becomes ineffective.Finally,combining with the actual development of the company to analyze the factors that affect the effectiveness of the internal capital market,it is concluded that the reasons for the effectiveness of the internal capital market are the effective supervision of the external market,the development of diversification strategy to provide sources of internal funds,and the efficient operation of BMW Brilliance to provide a large number of financial support for the operation of the internal capital market.The reasons for low efficiency and even ineffective are that the development of self-owned brand projects fails to meet the needs of customers,the diversification of investment types in a short period of time makes the project investment funds unable to form return,and the complex ow nership structure affects the overall information transmission of upper and lower levels.The third part,based on the case analysis,provides some enlightening suggestions for the future development of the internal capital market of enterprise groups in China.