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The Analysis Of The Issues On The Transparency Of The Disclosure Of Chinese Listed Companies' Related Party Transaction

Posted on:2006-05-28Degree:MasterType:Thesis
Country:ChinaCandidate:D H LuFull Text:PDF
GTID:2166360155954659Subject:Accounting
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Related party transactions(RPT) suffer more and more of thoughtfulness, because it has become the stumbling block of our capital market' s development. On the one hand, RPT can make advantage by optimizing the structure of capital and trade between the related parties. On the other hand, RPT provide the chance to Enterprise to carry on false trade behavior to gloss over report. According to system economics, RPT increased the risks of the potential infringement of the minority stock holder'interests .while, according to the signal theory of the agency by agreement, fully reveal of the RPT, can offer more transparent accounting information. One effective market can absorb such information to make the one no longer has the advantage of RPT information to offer a fair play. Firstly we investigate in the theory of RPT and the transparency of accounting information. RPT in our country has some characteristics.1. The inequality in position and interests; RPT will incline to the essence controlling side in the trade. The inequality in position must cause the unequal interest in the trade.2. The particularity of trade purpose; except of obtaining certain interests and individual efficiency, RPT in Chinese capital market has some other purpose, such as evading payment of duty rationally, seeking individual private interests or earning management. It is much because of its obscurity and relevancy.3. The obscurity of the way and the course of RPT; Since RPT are seldom supervised by external ones, its evenhandedness and reliability is in doubt. We define the transparency of RPT as the degree of integrality, reliability, relativity and comparability of the discovered information. To release transparent information, firstly, it needs mature criterion system. Secondly, it needs high-quality accounting information. The latter can be divided into four quality characteristics: Integrality, Reliability, Relativity and Comparability. We then analyze the discovery of RPT of our country in the above two levels, by normative studied and case analysis, in the hope of revealing the opaque reason, and then give some improvement methods. In china, a set of discovery rules has already been set out, which includes three kinds of disclosure method. 1. Revealing the RPT in the periodic report. It is regulated mainly by "Content and Form Rules of Disclosure of Information of Listed Company No.2——Content and Form of the Annual Report(1999)", "Disclosure of the Relationship between Related Parties and Their Transactions"and "Content and Form Rules of Disclosure of Information of Listed Company No.2----Content and Form of the Interim Report(2000)". 2. Disclose RPT by temporary report. It is regulated by the following two regulations: "Stock listing regulations of Shanghai Stock Exchange (2004)"and "Stock listing regulations of Shenzhen Stock Exchange (2004)".3. The new listing company also should reveal the related trade timely. It is according to "Content and Form Rules of Disclosure of Information of Listed Company No.2——Content and Form of the Prospectus(1999)", "Supervision Interim Procedure of Listed Company of Shenzhen", "the instruction for the reform and recombination of IPO Corporation". At present, the integrality, reliability, relativity and comparability of Chinese listed company's RPT are all need to be improved. 1. The reliability of RPT of listed company is not high. In some related parties'sale, it seems to accord to rules and regulations, but in fact the profit is manipulated and the reliability is reduced. There is another way to increase profit rapidly, which is to recombine or reform with big shareholder or other affiliated parties. Still some enterprises utilize other several kinds of RPT to carry on the false trade. The related trade information dependability encounters great challenge. 2. It is reliability needs to be improved; especially the RPT information needs to be carried out timelier. Although there is a requirement on disclosure time of regular reports and temporary reports in the rules and regulations, still a lot of listed companies do not reveal the information in time. They earn the enormous profits through making "time difference". There are a lot of listed companies receive condemning by SEC because of not revealing the RPT information in time every year.3. The disclosure of RPT is incomplete. The listed companies usually reveal the information ambiguously and deficiently, ignoring criterion and system. Thus the information cheats the mass of information users, cause negative influence. 4. The comparability of RPT is unsatisfied at present. The disclosure of related pricing policy is ambiguous, it is incomparable of financial data among listed companies; Because of affiliated party of trade, and it is difficult to compare financial index in horizontal. In sum, the opaque phenomenon of the discovery of our country listed company'RPT demand urgently to be improved. For this reason, we put forward improve suggestion from following three respects: 1. The company'perfect administration structure can improve transparency of the related trade. Firstly, we should strengthen independent director's function to improve the system of the director board; Secondly , it should improve the system of supervisors board to make inside supervision mechanism work more smoothly; Finally, it should change the existing stock structure and solve the problem of empty of the subject. 2. It is necessary to improve the CPAs'audit power to strengthen the external motive force of the transparency of RPT information. First, set up the Independent Audit Commission in the listed companies to make CPAs more independent. Secondly, it is to entrust the CPA association with punishment power to improve...
Keywords/Search Tags:Transparency
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