The Impact Of Interlocking Directorate On Related Party Transaction Within Business Group

In recent years, the international and domestic business groups have broken the financial scandal which attracted the attention of academics, research found that how many of these events and business groups within the associated transactions. We usually refer to related party transactions have two sides, there is fairness aspect at the same time there are also non-fair aspect. Scholars mainly from the accounting perspective about monitoring and measurement of the effect of related party transactions "hollowed out" and "support" research and the impact of earnings management, there are little from the board level influencing factors of related party transactions, and the impact of corporate the Group’s related party transactions within its fairness factor of academia are not enough. In view of this, on the basis of summing up the interfirm interlocking directorates and related party transactions at home and abroad theoretical research and empirical findings, our article choose business groups in China as research background, and interfirm related transactions as a starting point, through theoretical analysis and empirical research, we explore the impact of interlocking directorates in Business Group, as well as interlocking directorates directional characteristics how to impact the related party transactions fairness.Through public databases and manual data collection to collect the data of the interlocking directorates and related party transactions in business groups, as the foundation of the empirical analysis, using econometric theory and tools, based on descriptive statistics, we apply EVIEWS software to analyze the relationship between interlocking directorates and related party transactions of the enterprise groups in China, and how the chain directors directional characteristics impact the related party transactions fairness. Through theoretical derivation and empirical research, two assumptions we proposed have been proven and the following results were obtained:(1) Group member companies interlocking directorates have a significant positive impact on related party transactions occurred. Especially enterprises of different regions and industries, the promote of interlocking directorates relationship to related party transactions occurred more obvious.(2) Whether interlocking directorates have directional characteristics,it will impact the fairness of related party transactions, with non-directional chain compared to directionality of the chain,it will be more engaging non-fair connected transactions occurred. Especially for members of enterprises in different regions and industries, this effect is more pronounced. With the Background of Group of China’s listed companies, this study not only theoretically support the impact of interlocking directorates to related party transactions and its fairness, it is a beneficial inspiration that the relevant parts strengthen the supervision of the related party transactions for listed companies. This paper argues that from the point of view of the relationships of interlocking directorates network and related party transactions network, which will become an important and valuable research direction for future research.