The Effective Operation Mode and Its Inspiration of Internal Capital Market in State-Owned Enterprises: The Case Study of Harbin Pharmaceutical Group Corporation

2012 ◽  
Author(s):  
Cui Ying
Keyword(s):  
Capital Market ◽  
Operation Mode ◽  
Internal Capital Market ◽  
Pharmaceutical Group ◽  
Effective Operation ◽  
Internal Capital

Benford and the Internal Capital Market: A Useful Indicator of Managerial Engagement

2018 ◽  
Vol 19 (3) ◽  
pp. 309-329
Author(s):  
Florian El Mouaaouy ◽  
Jan Riepe
Keyword(s):  
Capital Market ◽  
Decision Rules ◽  
Fraud Detection ◽  
Capital Allocation ◽  
Financial Accounting ◽  
Internal Capital Market ◽  
Allocation Process ◽  
Internal Capital ◽  
Benford Law

Abstract We propose the application of digit analysis using the Benford law to indicate managerial engagement in the capital allocation process. First, we motivate the potential of the Benford digit analysis to identify allocation outcomes that are shaped by human engagement instead of fixed decision rules. Second, we provide a case study to illustrate how the Benford digit analysis can be used to detect allocations affected by managerial interventions. We are unaware of any study applying the Benford test to internal capital markets, while this approach appears very useful in this context. It is commonly used in the auditing, financial accounting, and fraud detection literature.

scholarly journals The Effect Of Internal Capital Market Of Korean Large Business Groups On Investment Efficiency

2017 ◽  
Vol 33 (5) ◽  
pp. 903-918
Author(s):  
Minwoo Lee ◽  
Yuwon Choi ◽  
Sanghyuk Moon
Keyword(s):  
Capital Markets ◽  
Capital Market ◽  
Stock Price ◽  
Business Groups ◽  
Internal Capital Markets ◽  
Investment Efficiency ◽  
Internal Capital Market ◽  
Factors Affecting ◽  
Controlling Shareholders ◽  
Internal Capital

This study examines whether the effect of funding through internal capital markets on investment efficiency is differentiated by the incentives of controlling shareholders as measured by the divergence between cash flow rights and voting rights of controlling shareholders (hereafter, wedge). To empirically analyze hypotheses of this study, 1,189 firm-year observations were collected from Korean firms listed on the Korea Composite Stock Price Index (KOSPI) belonging to a large business group designated by the Korea Fair Trade Commission over the period from 2005 to 2012. The results of the analysis are as follows. First, we find that the magnitude of internal funding, as measured by total payables to the related parties, is positively (+) associated with investment inefficiency. Second, the interaction variables of total payables to the related parties and the wedge have a significant positive (+) effect on investment inefficiency. In other words, the deterioration of investment efficiency due to the increase in total payables to the related parties was mainly caused by firms with a big wedge. This result suggests that the effect of internal capital markets on investment efficiency of large business groups may be differentiated by the wedge that is proxy of the controlling shareholder’s incentive. This study provides additional evidence on previous studies on the investment efficiency of large business groups by considering both the internal capital market and incentives for funding using the internal capital market, which are important factors affecting the investment of large corporate groups. Also, the results of this study are expected to provide implications for the regulatory policy of large business groups which have recently become an issue in Korea.

With one hand tied behind their back

2017 ◽  
Author(s):  
Graeme Guthrie
Keyword(s):  
New York ◽  
Capital Markets ◽  
Capital Market ◽  
Cable Television ◽  
Share Repurchases ◽  
Internal Capital Market ◽  
Internal Capital ◽  
External Capital ◽  
Investment Returns ◽  
Break Up

This chapter uses the New York cable television provider Cablevision to describe the way in which boards can delegate some of the task of monitoring management to participants in external capital markets. Unlike a firm’s current shareholders, who have little say over how their funds are allocated, external capital markets provide their funds only if the investment returns are adequate. This chapter shows how managers of firms with substantial cash-generating assets in place can use the collateral that these assets provide to weaken the discipline of external capital markets. It shows how their ability to do this is restricted if the board authorizes share repurchases or special dividends funded by increased borrowing, as these replace “soft” payouts to shareholders with “hard” payouts to bondholders. Managers’ ability to exploit collateral is further restricted if the board uses spinoffs to break up the firm’s internal capital market.

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