Research On Application Of Fair Value In Related Party Transaction Pricing Of Chinese Listed Companies

Related party transactions generally exist in day to day business activities of listed companies in China. From a positive point of view, related party transactions can strengthen the integration of resources within the Group; reduce transaction costs; improve the financial position and enhance overall competitiveness. However, from a negative perspective, the use of related party transactions may affect the independence of listed companies. It also provides the means to whitewash the financial statements. Meanwhile, it may transfer the tax and cause losses to the country and to the minority shareholders. Therefore, related party transactions pricing, which is an important standard to identify whether the related party transactions is fair or not, becomes the focus of national regulatory authorities and small investors.In recent years, the accounting profession at home and abroad is in full swing carrying on work to make the fair value measurement standards continuously and comprehensively. The global financial crisis has not stopped, but accelerated the process of this. The production and development of the fair value has a profound historical background and strong theoretical foundation. It reflects the rules of historical development of accounting but not people's will. After the termination of the financial turmoil, the application range of fair value will be much wider.So, how to apply fair value in related party transactions pricing becomes an urgent problem to standardize and improve the related transactions of Chinese listed companies.This thesis is divided into five parts, the main contents are as follows:The first part briefly introduces the motivation of choosing this topic, summarizing related literature home and abroad, describing the idea and active exploration of this study.The second part defines the basic concepts of related party transactions by comparing international related standards, outlining several methods of related party transactions pricing, coming to the preliminary conclusion that market-oriented method should be the preferred method of related party transactions pricing.The third part provides an overview of the basic theory of fair value, listing experience of fair pricing of related party transactions in foreign countries, discussing the necessity of applying fair value in related party transactions pricing in Chinese listed companies.The fourth part analyzes the current situation of application of fair value pricing in related party transactions in China and why it is like this.The fifth part proposes the suggestion that we should promote the application of fair value in related party transactions pricing by refining the standards, improving the practice and strengthening the supervision promotion.Through research and demonstration, the author draws the conclusion that related party transactions of listed companies using fair value to price is both reasonable and necessary. This thesis also gives some useful suggestions about how to promote the application of fair value pricing by related party transactions according to the current situation.