Analysis And Precautions Of LBC Financial Risks Caused By Related Transactions

With the continuous development of market economics and continuous improvement of the stock market, more and more related transactions has become a hot topic. Fair related transaction can not only reduce transaction costs and use administrative power to ensure the priority of business contract and avoid the asymmetry of information, but also can improve the efficiency and competitiveness. On the contrary, unfair related transactions will reduce the listed companies’ operation management ability and ability to resist external risks. In practice, although related parties of the transaction are independent legal person in law, the unindependent subordinate related parties of the transaction are likely to be a contolled tool that serving for group company due to the relationship between control and being controlled. Related transactions is a neutral concept in terms of the economics. Listed company can reasonably use related transactions to reduce transaction costs and use internal resources effectively.However,listed company should take precautions to prevent a lot of risks in the use of the operation, especially the financial risk.Financial risk is a part of the risk.Financial risk is an objective existence and a realistic problem that enterprises have to face in the process of financial management. Management must take effective measures to reduce the risk which can not be completely eliminated. There is important theoretical and practical significance to analyze the listed companies’ financial risk caused by related transaction due to the huge interests of all involved parties. LBC is a typical representative of the lised company which faced with financial risk caused by the large number of unfair related transaction. This paper firstly reviews domestic and foreign academic research status of listed companies’ financial risk caused by related transaction.Then the theoretical knowledge of the listed companies’ financial risk are summarized.And then the author begin to analyze LBC’ financial risk caused by related transactions conbined with analysis theory and method of financial risk.At last this paper put forward internal and external precautions for listed company.