Discussion On Information Disclosure Of Related Transactions Of Listed Companies In China

With the development of the reform and opening,Chinese market economy has become a mature economy.Furthermore,the modern enterprise system has become an engine for the domestic IPO which can improve financing capacity for companies.In fact,related party transactions stem from the reform of state-owned enterprise.On the one hand,as an important tool for reducing cost,the related party transactions can improve management as well as profitability.On the other hand,it is controversial that characteristics of related party transactions,such as concealment and complexity,could bring a negative influence on the related companies.For example,some listed companies utilize related party transactions for financial statements whitewashing.It is not only a violation for the legitimate rights of investors,but also loss for the state-owned companies.By the meantime,people should realize that listed companies should disclose their related party transactions.This paper argues that there are several problems in the information disclosure of related party transactions,moreover,this paper also makes suggestions for practical guidance.With the assistance of case study as well as theoretical knowledge,initially,this paper introduces background and significance of this research from different perspectives,such as,regulation,quality and governance of related party transactions.Furthermore,this paper demonstrates various viewpoints from famous scholars and makes literature reviews.Secondly,this paper shows the basic definitions of related party and related party transactions,moreover,it also introduces the advantages and disadvantages of the related party transactions,then makes reviews of related theories,for example,the efficient market hypothesis,information asymmetry theory and transaction cost theory.In the case study,this paper makes analysis of the dilemma of related party transactions in this company.Furthermore,this paper argues that it is not complicated for making company fraud with related party transactions,because of drawbacks from accounting firm and government,external deregulation.In order to tackle the above problems,this paper makes related research about disclosures of related party transactions from western countries,for example,this paper demonstrates that American companies utilize different solutions for these problems,such as,making definitions of related party transactions,making promotion for related legislation and making protection for interests of small shareholders.Finally,from differentperspectives,this paper makes related suggestions for Zixin Pharmaceutical in order to improving the disclosures of related party transactions.With the case study and related analysis,this paper argues that Zixin Pharmaceutical should disclose their related party transactions and tackle related problems.This paper also makes suggestions for improving disclosures,such as moral management,corporate governance structure improvement and internal control improvement.At the same time,accounting firm and government not only play important roles on the supervision and regulations,but also should have obligation on making penalties for illegal companies.Finally,it can make positive influence on information disclosure of related party transactions.