China Listed Companies And The Controlling Shareholder Of The Related Party Transactions

A related party transaction is an event that a transfer of resource obligations takes place between related parties, regardless whether a price is charged. That related trades of the listed companies mainly refer to the trades between the listed companies and their business shareholders and their subsidiary company. Most of the listed company is generated from the restructure of the stated-owned enterprises. Therefore the listed company and the stated-owned enterprise have tight business relationship with each other. What's more, the security market is always serviced for the reform of stated-owned enterprises. Finally, the structure in the listed company is unreasonable for that their shareholders of the stated-owned enterprises have peculiar behavior pattern. Because of the reasons described above, it is popular for the related parties conduct business transactions in our country, and there is a great deal of unfair transactions meanwhile. Therefore, the securities market government has lay emphasis on the related transactions between the listed companies nowadays. And in this thesis I mainly research the related transactions between the listed companies and their shareholders.The related party transaction is a peculiar form of economic activity, and has the distinctive characteristics. For example, for the one side the normal related transaction could make the business scaling up, reducing the risk of transactions, lowering the transaction costs, and realizing the strategic objectives of the whole business group. But for another side, some of the listed companies make use of the malfeasance related transactions to manipulate the profits of their companies or invent the deceitful related transactions to jack up their stock prices in order to raising funds from the capital market, harming the interests of creditors and shareholders, and disturbing the order of the capital market. It is of great importance to reinforce the regulation of related transactions in order to protect the proper interests of investors, improve the efficiency of the capital market, and maintain its stability. The government has issued a series of regulations and taken over many measures, besides the Ministry of Finance has also implement the new Generally Accepted Accounting Principles in 2006. However, these measures can not control the related party transaction effectively.This thesis thoroughly studies related transactions of the listed companies in China. Based on the relevant regulating rules set down by the Securities Regulatory Commission, it mainly focuses on the characteristics of the related transactions of listed companies and the reasons incurred the present issues. It points out the weaknesses on the supervision of the related party transactions, because of the imperfect company structure, the lack ness of Generally Accepted Accounting Principles and the corporate governance problems. Combined with the main views of scholars at present, this thesis puts forward measures and suggestions on regulating related transactions of listed companies. So it is necessary to improve the corporate economic activity and management efficiency of the listed companies, including reducing state-owned shares, and making full use of the role of independent directors. What's more, accounting standards should be improved to strengthen the regulation of the related party transaction principles. And lastly, it is also crucial to develop the related transactions information disclosure rule and performance evaluation index system of listed companies.The thesis is divided into four parts: The first part introduces the elementary theory on related transactions of listed corporations. In this section, it explains the definition of related party and related party transaction, identifies their classifications, and clarifies their origins, and presents the positive and passive effect on the transactions. The second part analyzes the characteristics of related party transaction between listed companies and their shareholders in China. The third part lay emphasis on researching the reasons that lead to the massive related party transactions. Such as the imperfect structure of the listed company, the limit of related party transaction principles, and the underdeveloped Securities Market. The forth part is about countermeasures and suggestions.