Effects Related Transactions Of Listed Companies On China's Loss Of Value

Along with the development of the company system and the benefit relationship between associated parties, a more complex economic phenomena-related party transaction produced, which generally exists in the operation of all countries’ companies. Related party transactions could reduce transaction cost, optimize the property structure, enhance market competitiveness, but controlling shareholder use related party transactions to infringe upon corporate value, harming interest of medium and Small-sized investors, and tunneling behavior.These behaviors effect market economy resource allocation and sustainable development of capital market and social economy. Therefore, it is important to further study influence of related party transactions. With the continuous expansion of China’s capital market, the losses state of enterprise is also growing, however, due to the system state policies, lost listed companies are being under pressure of suspending or withdrawing, therefore, the phenomenon of using related party transactions in lost listed companies become more and more widespread. Little research literature before in these area, there are theoretical and practical significance to research on related party transactions of lost listed companies.Based on domestic and abroad relevant literatures reviewed, this paper applied the normative analysis method to study the relationship between related party transactions and corporate value in terms of transaction costs theory, coordination theory, asset specificity and principal-agent theory. Analysis results demonstrated that related party transactions could reduce transaction cost, realize coordinated effect, promote investment of specific asset, but related party transactions would be used by insider controller and controlling shareholder to encroach company’s interests. Consequently, this paper study that how do the size, nature and benefits flowing of related party transactions affect corporate value based on lost listed company, by choosing the data of listed companies of China from2009to2012. Finally, this paper applied the methods of independent-samples T-test, Pearson correlation analysis and regression analysis to the study of the relationship between related party transactions and corporate value.The results of research revealed that:there is a positive relation between the size of related party transactions and corporate value of lost listed company. Losses incurred in the enterprise, in order to alleviate the urgent needs of the company, the companies often increase the amount of related party transactions with related parties, which, on one hand can reduce the transaction costs, create synergy; on the other hand can transfer high-quality assets and resources to the enterprise through transactions with related parties. These behaviors can also encourage enterprises to complete the revival soon and enhance the corporate value. In term of relations between the nature of related party transactions and corporate value, the fair related party transactions can enhance the company’s value, while non-fair related party transactions have a serious negative impact on the value of the company. Association inflows can enhance the company’s value, while association outflows would reduce the value of the company; What’s more, association inflows have a greater impact on corporate value of lost listed company than the associated outflow, which reflects that currently the Chinese enterprises are still facing varying degrees of financing constraints. Association inflows alleviate the company more effectively. Finally, the suggestions was provided as follows:(1)Regulate the related party transactions of listed companies. First, standardize the relationship between related parties; Secondly, increase the transparency of disclosure of related party transactions and improve the disclosure system of related party transactions; The third, accounting firms and other intermediaries should strengthen supervision and auditing on related party transactions.(2)Improve the legal mechanisms to protect the interests of small shareholders.(3) Strengthen the legal penalties for acts against the interests of listed compames.