Research On Related Party Transaction,Institutional Ownership And The Efficiency Of Resource Allocation

Since the 14th National Party Congress,giving full play to the market in allocating resources has been mentioned in every National Party Congress and government work report.There it was,in the moment of the China's New Normal when the China's economic growth has slowed,a method that utilizing limited resources effectively has become the critical point of economic development.It is hardly to completely separate between companies due to the specificity of the restructuring and listing of China's state-owned enterprises system,making the related party transactions commonly existed.On the one hand,the related party transactions could take advantage of inner market to reduce the costs and enhance the efficiencies,compensating for the deficiency of the external capital market.On the other hand,it also can be used in terms of surplus manipulation and falsified financial statements,which could have a serious impact on the efficiency and effectiveness of resource allocation in capital market.As one of the important outside shareholders,institutional investors can take advantages of their resources to play a supervisory role that regularizing the operation and management of listed companies and guide the resources distribution within capital market.This essay tries to inquire into connected transactions to discuss about the relationship between the related party transaction and institutional ownership and the efficiency of resource allocation.The essay studies the problem by using the normative research and empirical research.Firstly,it introduces the research background,significance,the methods,main content and innovations.Secondly,after reviewing related articles,it analyses the principle agent theory,rational economic assumption and information asymmetric theory.Thirdly,the relationship of four main business related transactions(related guarantee,related sales,assets related transactions and related financial transactions),the institutional ownership and the efficiency of resource allocation were discussed in this paper.Through literature review and theoretical analysis,three-level hypotheses have been proposed.A-share listed companies in year 2007 to 2014 selected as samples to construct the regression model to test the hypotheses.The empirical results suggest that:1.The different types of transactions have different effects to resource allocation efficiency.The level of related guarantee transactions is negatively correlated with the efficiency of resource allocation.The level of assets related transactions and related financial transactions is positively correlated with the efficiency of resource allocation.And there is no significant impact on the efficiency of resource allocation associated with related sales.2.Institutional investors will help enhance the efficiency of resource allocation of capital market.3.Institutional investors can suppress the negative effects of related guarantee transactions to efficiency of resource allocation,and can facilitate related financial transactions to play an active role in the allocation of resources.But institutional investors did not have a significant impact on the related sales and assets related transactions to efficiency of resource allocation.From the macro perspective this article explored the relationship of related party transactions,institutional ownership and the efficiency of resources allocation.And it is meaningful to give suggestion to supervise related party transaction,guide the development of institutional investor and to improve the capital market and the efficiency of resource allocation.