An Empirical Study Of The Impact Of Related Party Transaction Of Listed Corporation On The Earnings' Value Relevance In China

The quality of accounting information has always been the center of listed company information disclosure regime. Accounting earnings information is also the core which with the most rich information in financial report. While how to analyze and evaluate it is not only related to the improvement of information disclosure system, but also has a practical significance for value investment.Under the Information View,earnings'value relevance means the relevance between earning information and the value invest decision made by the investors. It means the ability which based the resent or past earning information to promise its future earning level and change direction. This ability is more strong, the earnings'value relevance more strong. There are many factors that will affect the earnings'value relevance. Related-party transactions are important ones. On the one side,it can increase the stability of earnings and operating efficiency, supporting the value of investments in securities valuation and decision analysis and enhancing the earnings'value relevance; on the other side, it may be a means of major shareholder or management to control a listed companies that reducing the trust of investors and even misleading investors make a wrong investment decisions and reducing the earnings'value relevance.Based on the reviews of the foreign and domestic researches on the earnings'value relevance, introduce the concepts of earnings'value relevance and makes an analysis of the relation between them. Then, use the empirical data of related buying and selling in listed companies from 2005 to 2008 to analysis the relation between related-party transactions and earnings'value relevance.The results of empirical analysis indicate that,related-party transactions have notable influence on earnings'value relevance. The listed companies which have appropriate proportion or related-party transactions will have higher earnings'value relevance. There is a significant"inverse U", relation between related-party transactions and earnings'value relevance.