Abstract
Controlling shareholders pursue benefits of control (private benefits and shared benefits) via related party transactions, which result in different levels of earnings quality. Using data from all A-share listed companies in Shenzhen and Shanghai stock markets in the year 2001 and 2002, we found that when the share ratio of controlling shareholder is less than 50%, they prefer pursuing private benefits of control via related party transactions, giving rise to deterioration in earnings quality. By comparison, when the share ratio is more than 50%, controlling shareholders prefer pursing shared benefits of control through related party transactions, which improve earnings quality as a result.
| Original language | English |
|---|---|
| Pages (from-to) | 187-203 |
| Number of pages | 17 |
| Journal | Frontiers of Business Research in China |
| Volume | 2 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - Jun 2008 |
Keywords
- Benefits of control
- Controlling shareholders
- Earnings quality
- Related party transactions
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Tong, Y., & Wang, H. (2008). Related party transactions, benefits of control and earnings quality. Frontiers of Business Research in China, 2(2), 187-203. https://doi.org/10.1007/s11782-008-0011-x