This study examines whether subsidiary banks’ accounting quality improves internal capital allocation efficiency of multi-bank holding companies (MBHCs). Taking advantage of the filing requirements for subsidiary banks, we find that MBHCs with higher subsidiary accounting quality have higher internal capital efficiency. We further find that this relation is more pronounced for larger MBHCs, MBHCs with a larger number of subsidiaries, and MBHCs with more subsidiaries located further from the MBHC headquarters, consistent with superior accounting quality mitigating information problems between the CEO and subsidiary managers. We also document that the positive relation between subsidiary accounting quality and internal capital market efficiency is stronger for public banks, suggesting that higher quality information is more useful when information asymmetry between the CEO and shareholders is greater. These findings contribute to our understanding of the role of accounting information within an organization and the factors affecting internal capital market efficiency.