Disclosure Of Related Party Transactions Of Listed Companies In China Norms

Transaction between listed companies and their associated parties refers to the complicated economic proceedings or arrangements between listed companies or their holding subsidiary companies and the interest bodies based on every company. These economic proceedings or arrangements are in order to transfer resources or obligations. In China, most of listed companies are transformed from state-owned enterprises. In order to come into stock market, parent companies peel off their "high grade assets" to be listed companies. However, their staff, finance and assets do not detach thoroughly which causes the limitation that these listed companies have strong dependence on their parent body. Compared with the independent transactions which comply with the principle of market competition, transaction between listed companies and their associated parties has many advantages such as reduced information cost, supervision cost and management cost which help to enhance the operation efficiency and competitiveness of the companies. But motivated by self-interest, associated parties tend to abuse their control over the company to break the rule of equivalence and compensation in business. This kind of breach leads to unfair transaction, and further damages the legal rights and interests of the company and the other interest-related parties, and also brings damage to the country. With the basic accomplishment of the reform of equity capital, the organizational structure of our listed companies has improved a lot. Because of the imperfect capital market and other historical factors, unfairly transaction still occupies a very important role in the operations of our listed companies in china. There are also many shortages in the publication of accounting information system which impact the rights and benefits of all parties regarded severely. At present, the disclosure after the transaction is valued even highly than the examination and approval before the transaction which can not curb the frequent occurrences from the point of prevention. Besides, the study of the disclosure of the transaction between listed companies and their associated parties are mostly focused on the quarterly-reports and yearly-reports of the listed companies in Shanghai stock market and Shenzhen stock market which may lose some authenticity because these reports already have some cover-up to some degree.This paper starts from the concept of associated parties and the essence of transaction between listed companies and their associated parties, based upon the new accounting rule and using the method of normative analysis. From the problem of the disclosure of transactions between listed companies and their associated parties, this paper analyzes the causes and then expounds how to standardize the information disclosure of transactions between listed companies and their associated parties. This paper includes five parts:The first part: foreword. It generalizes the motivation of this subject, research status quo of the subject, research method, structure of the content, viewpoints of the paper and the theoretical foundation of the transaction and disclosure.The second part: research of the foundation of transaction disclosure. It starts with the definition of concept, by analyzing the transformation under the new rule and the actual situation in china, and then concludes the exhibition of and influence of the transaction.The third part: mainly focus on the problems revealed by the transaction and the causes. It proceeds with the status quo of agencies (especially offices), the inner organizational structure, supervision, and then analyzes the causes of the present problems. This part is one of the main parts of this paper.The forth part: countermeasures to normalize the information disclosure of transactions between listed companies and their associated parties. Based on the analysis of the previous parts, this part will discuss how to normalize the information disclosure of transactions between listed companies and their associated parties from three levels: agency, organizational characteristics of the enterprises and self-discipline and supervision departments. At the end of the paper, I summarize the paper and expound the research prospect in combination of the problems in the process of writing.In the respect of talking about normalizing the disclosure of the transactions between listed companies and their associated parties, this paper emphasizes not only protecting the interest of the medium-small-sized shareholders and creditor, but also maintaining the interest of the listed companies. As to the responsibilities of the agencies, the auditors should have sufficient awareness of the unfair associated transactions from the form to the content by training and introduction. This paper also pays attention to the influence of the enterprises' self-discipline mechanism, in order to get to the purpose of normalizing the disclosure of the transactions between listed companies and their associated parties, the inner balanced mechanism of enterprises and agencies should be emphasized.