A Study On ZX Company's Related Party Transaction Fraud

With the rapid development of global economy,the competition among enterprises is increasingly fierce and many enterprises create association relationship in different forms.And the transactions between these associated enterprises are called related party transaction.Related party transactions are happened all over the world,for the reason of effectively taking advantage of the internal resources in company group and better understanding for both parties.Thus,the transaction cost will be reduced and the enterprises will have more strengthened market competition.However,one party is likely to be controlled or influenced by another party due to the association relationship,and the controlling party is likely to carry on unfair related party transactions on some purpose.Controlling shareholders can manipulate profits by unfair related party transactions,violate the interests of minority shareholders,and whitewash financial statement to deceive investors,even empty company,eventually lead to bankruptcy,seriously affect the healthy development of the stock market.Therefore,study on ZX Company's related party transaction fraud,analyze the causes and means of the fraud and make suggestions for it,which has important practical significance.This paper firstly introduced the background,significance,domestic and foreign literature review,related concepts,methods and the framework.Then,the principal-agent theory,the rational economic agent hypothesis and the fraud triangle theory are introduced to be the theoretical basis of analyzing the following case.Through the concrete analysis of ZX Company's fraud case,it is concluded that the main cause of the ZX Company's related party transaction fraud are as follows: the management abuse power to meet their own interests,the company's internal management system is not sound,and accounting firm's dereliction of duty.At last,this article has proposed from government,company and accounting firm these three aspects to prevent the ZX Company's related party transaction fraud.On the one hand,the government should increase the penalties on the relevant responsible person,company,accounting firm and certified public accountants to increase the cost of violation.On the other hand,the company should optimize internal ownership structure to improve the independent director system,and strengthen supervision function of the board of supervisors.At the same time,the accounting firms should also improve their management level by creating a good corporate culture,enhancing the brand value and strengthening the staff management and so on.