Conglomerate Investment and Internal Capital Market Efficiency

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  • 多角化企業の投資決定と内部資本市場の効率性
  • タカクカ キギョウ ノ トウシ ケッテイ ト ナイブ シホン シジョウ ノ コウリツセイ

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Abstract

<p>We have considered conglomerate investment based on the theory of investment under financial conditions and internal capital market, and assured its validity from financial perspective. Conglomerate capital supply curve consists of intra-divisional, inter-divisional, and external fund. Investment by intra-divisional fund depends on divisional cash flow and fixed capital expenditure. Investment by inter-divisional fund depends on the internal capital market efficiency. Internal capital market efficiency depends on funds provided by divisions, and asymmetric information of executive management and division. Assuring those theoretical consideration, we have approved hypotheses; more abundant intra-divisional fund, or higher internal capital market efficiency increases investment; more sufficient internal fund or less fixed capital expenditure increases internal capital market efficiency; diversity in divisional capital supply increases internal capital market efficiency.</p>

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