The Research On Information Disclosure Of Related Party Transactions Of Listed Companies In China

Due to the special nature of our economic system, the establishment of listed companies is different from other countries, most are restructured from state-owned enterprise. The "quality assets" of parent companies are split out to become a listed company, therefore there is a definite link between each others. Inevitably, it will be associated with related party transactions. With the rapid development of capital markets in Shanghai and Shenzhen shares markets as the leading representatives, the size of the firms are becoming larger than ever before, the proportion of related party transactions in the course of trading is also increasing. However, due to Chinese imperfection of market economic system, and the immaturity of the relevant laws and regulations, coupled with the weak internal control system, and the induction of relevant benefits, which lead listed companies to use the related party transactions to manipulate profits, transfer taxes, etc. The presence and spread of this phenomenon has seriously damaged the legitimate right and interests of stakeholders, and hindered the healthy development of capital markets. Therefore, the principles for information disclosure of listed companies related party transaction is necessary and imminent.Information disclosure is an important part of related party transactions to reveal unfair transaction to protect the user of finance report. It’s of great importance to research related party transaction information disclosure to provide theory and practice support.The thesis use standard research methods, with asymmetric information theory and transaction cost theory supporting. Then it begins with the concept of related parties and related party transactions, and employs normative approach combined with statistical methods to analyze the status of related party transactions of listed companies in China to find the problems so that to study how to regulate the information disclosure of listed companies related party transactions in China. It deals with the problems from three aspects of accounting standards, internal governance structure, external supervision. The thesis consists of five parts: Part I:Introduction. Firstly introduces the background and significance of this study, then describes the research status and the literature review, finally introduces the content and framework of main ideas, as well as research innovation and shortcomings.Part II:Research fundamentals of China’s listed companies related party transaction information disclosure. Define the concept of related parties and related party transactions to discuss three important principles for the disclosure:substance over form, importance and timeliness. Finally introduces the detailed content of information disclosure of related party transactions and the theory fundamentals of information asymmetry, principal-agent and transaction cost theories.Part III:Analysis of current information disclosure and problems of China’s listed companies related party transaction information disclosure. This part statistically analyses the related party transactions of242listed companies occurred within recent three years (2009-2011) in Shenzhen motherboard. Problem analysis of information disclosure of listed companies related party transactions in China. This section analyses the problem of information disclosure of listed companies’ related party transactions in China based on the analysis of current information disclosure of China’s listed companies related party transaction information disclosure. Then it analyzes the problems existing, and parse the causes of the problems from three main aspects.Part IV:Suggestions to improve the related party transaction information disclosure of listed companies in China. Based on Problem analysis of information disclosure of listed companies’related party transactions, this part makes specific suggestions to enhance the quality of related party information disclosure by improving the accounting standards, restructuring corporate governance, and strengthening the external supervision.Part V:Conclusion. The final part includes summary and prospect, and the limitations of the study and the inadequacies to be future reference of information disclosure of related party transaction.This data of related parties and related party transactions information disclosure are collected manually by author, however, due to the large number of related party transactions occurred in China listed companies, in addition to limited capacity and time, with a random sampling method, and does not cover the entire related party transactions in the listed company date, so the data have limitations, which cannot be a comprehensive study on the issue of information disclosure of related party transaction. In addition, due to the author’s academic standards and research capacity is limited, the thesis there are inadequacies still, and should be improve in the future study and research.