Related Party Transaction,Production Market Competition And Comparability Of Accounting Information

The goal of financial reporting is to provide investors,creditors and other market participants with financial information to help them make effective investment decisions(IASB and FASB,2010).Accounting information quality is closely related to relevant decision-making of information users,so improving accounting information quality has always been an important field of empirical accounting research.Accounting information comparability,as an important member of the quality characteristics of accounting information,has been recognized as an indispensable part of financial reporting and is very useful for achieving the objectives of financial reporting(Barth,2013).It enables investors,creditors and other users of accounting information to distinguish the similarities and differences of different sets of accounting information.Using comparable accounting information,investors,creditors and other users of accounting information can make appropriate comparisons of alternatives to optimize their capital allocation.Accounting information comparability has very obvious and very important economic consequences,so it has very important theoretical and practical significance to study it.Nowadays,listed companies are basically controlled by the group or the whole group is listed directly as a separate entity.The relationship between related parties is complex,and the proportion of related party transactions is very large.Their trading forms are quite different from the market trading behavior.They have some inherent characteristics.They are one of the most common relational trading modes.However,the information disclosure of related party transactions started late,and earnings manipulation through related party transactions,even theft of company property and other incidents are common.Therefore,the urgent task is to strengthen and improve the relevant information disclosure mechanism.There are two tit-for-tat hypotheses about the role of related party transactions: efficiency promotion and impairment.We can speculate whether the impact of related party transactions on the comparability of accounting information is promotion or impairment,but whether the specific evidence can be provided is unknown.Accounting information quality is not only affected by the company's own factors,but also by the whole market environment and industry competition.Many literatures show that product market competition has a strong corporate governance effect,that is,it can help enterprises strengthen supervision and management,and enhance their competitive advantages from inside to outside.But there are also some documents that show that some enterprises will take care of the pressure of external opinions when facing the product market competition,and manipulate earnings to achieve the desired performance of managers,barely maintain listing qualifications and meet the expectations of market participants,so as to damage the authenticity of economic matters and information disclosure,and then damage the quality of accounting information,that is,earnings pressure effect.This paper will also analyze the corporate governance effect and earnings pressure effect,who is strong,who is weak and who is dominant.Firstly,this paper is based on a series of related research,and puts forward hypotheses to be verified in combination with relevant theories.Secondly,the empirical research method is used to analyze the selected samples and test the hypothesis.The main part of this paper takes Shanghai and Shenzhen A-share non-financial insurance listed companies from 2005 to 2015 as samples.Based on the empirical regression model,it analyses the relationship between related party transactions and accounting information comparability,and the impact of product market competition on the relationship between related party transactions and accounting information comparability.The empirical regression results show that there is a significant negative correlation between the level of related party transactions and the comparability of accounting information,which supports the hypothesis of efficiency damage of related party transactions.Intense product market competition will promote the negative correlation between the level of related party transactions and the comparability of accounting information.However,the negative correlation between related party sales and the comparability of accounting information is not significant in product market competition,but only significant in the negative correlation between related party purchases and the comparability of accounting information.That is to say,product market competition promotes the negative correlation between related party purchases and the comparability of accounting information.This is mainly due to the earnings pressure effect of product market competition.When managers want to manipulate earnings through related party transactions,they may take more active and more controllable related purchase behavior.For regulators,to continue to improve the information disclosure mechanism of related party transactions of listed companies will not only help accounting information reflect economic matters more truthfully,but also enhance the value content of accounting information.In order to avoid or reduce the use of related party transactions for earnings manipulation or even stealing company property,it is necessary to have a more detailed understanding of related party transactions and formulate more comprehensive and feasible disclosure rules and regulatory programs.In addition,this study shows that regulators should pay more attention to the related party transactions in which listed companies purchase goods and accept labor services as buyers,that is,capital outflow related party transactions.Regulators can also make more targeted macro-control,strengthen the supervision of the market,avoid excessive market competition,and reduce the negative correlation between related party transactions and comparability of accounting information in product market competition.For stakeholders,they can analyze the value of accounting information by understanding the level of related party transactions of listed companies and the product market competition of their industries,so as to optimize the allocation of capital and promote the healthy development of the market.