An Empirical Study Of The Impact Of Related Party Transaction Of Listed Corporation On The Earning's Value Relevance

Under the Information View, earning's value relevance means the relevance between earning information and the decision made by the investors. Many scholars research on the earnings' value relevance, and the factors that affect it. There are many factors that will affect the earnings' value relevance. Related-party transactions are important ones. On the one side, they can improve the stability of earning of listing companies. They can improve the company's operating efficiency and the decision-making revelance of investors. So that they may improve the earning's value relevance. On the other side, related-party transactions may become the main mean of tunneling, and they may reduce the confidence of investors and reduce the earning's value relevance.Firstly, the paper reviews the foreign and domestic researches on the empirical evidence of earnings' value relevance. Then, basing on the introduction of the concepts of related-party transactions and earnings' value relevance, this paper makes an analysis of the relation between them. Then, use the empirical data of related buying and selling in listed companies from 2003 to 2006 to analysis the relation between related-party transactions and earnings' value relevance. At last, we use the data of other types of related-party transactions to do the stability test.The results of empirical analysis indicate that, related-party transactions have notable influence on earnings' value relevance. The listed companies which have appropriate proportion of related-party transactions will have higher earnings' value relevance. There is a significant "inverse U" relation between related-party transactions and earnings' value relevance.