The Study On The Related Transactions Of Chinese Listed Companines And Its Influence On Company Performance

The problem of related transactions of listed companies has always been hot on thestock market in China. It is difficult and important on how to standardize the relatedtransactions. As a form of resource allocation, the related transactions performs a roleof the double-edged sword. It can improve the company by reducing the transactioncost and enhancing the value of company while it can also become a strong means bywhich strong stock holders invade and occupy the interests of small investors.According to China’s practical situation, the related transactions have become animportant tool of encroaching the interests of medium and small investors andemptying the listed companies by the majority stockholders. It damages the interestsnot only of the medium and small investors, but also of the listed companiesthemselves.This paper analyses the causes and effects of related transactions according to itsdefinition and classification. Besides, it pays more attention on the causes of theunfair linkage transactions and the influence on the value of listed companies. On thebasis of analysing the general situation of related transactions of listed companies inChina, this paper chooses ROE and Tobin’s Q Value as key performance indicatorof companies and checks the effects of related transactions on companyperformance by the means of demonstration and analysis. The results show that thecompany performance is worse in the listed companies who have related transactionsthan those who do not have. The scale of related transactions and companyperformance are inversely correlated.The paper shows that the causes of relatedtransactions, especially the unfair linkage transactions lie in the concentratedproprietorships. The more the proprietorships concentrate, the larger scale of relatedtransactions are and the more time they happen. It will affect both the company valueand performance. As a result, in order to change the unfavorable effects of relatedtransactions, this paper puts forward several political advices, such as optimizing theownership structure of listed companies, perfecting the information disclosure systemand strengthening the force of supervision.