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  • Research Article
  • Open Access

Related party transactions, benefits of control and earnings quality

Frontiers of Business Research in ChinaSelected Publications from Chinese Universities20082:11

Published: 30 July 2008


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.


  • related party transactions
  • benefits of control
  • earnings quality
  • controlling shareholders