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An assessment of the relationship between channel stuffing and related party transactions: evidence from China’s listed companies

Author

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  • Yenpao Chen

    (Soochow University)

  • Chien-Hsun Chen

    (Chung-Hua Institution for Economic Research)

  • Yu-Ting Wu

    (Deloitte & Touche)

Abstract

The paper sets out to examine the critical issue of whether the managers of listed companies in China engage in channel stuffing toward the end of accounting periods to avoid making a loss. It also seeks to determine the types of channel stuffing that listed companies in China engage in. The empirical results obtained in the study show that credit extension is the main method that is used for channel stuffing in order to avoid reporting a loss. The relationship between channel stuffing and related party transactions among listed companies in China is significantly negative and appears to be a substitutive one. Furthermore, when companies engage in channel stuffing, in the vast majority of cases the targets of this activity are not related parties, this characteristic is especially pronounced in the case of private-sector enterprises and enterprises that are not operating in highly regulated industries.

Suggested Citation

  • Yenpao Chen & Chien-Hsun Chen & Yu-Ting Wu, 2019. "An assessment of the relationship between channel stuffing and related party transactions: evidence from China’s listed companies," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 16(2), pages 116-127, July.
    • Handle: RePEc:pal:ijodag:v:16:y:2019:i:2:d:10.1057_s41310-019-00061-1
    DOI: 10.1057/s41310-019-00061-1
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    Cited by:

    1. Donghua Chen & Xuerui Wei & Huimin Wang, 2022. "Controlling shareholder’s ownership, control rights and related-party transactions – analysis of regulatory effects based on board characteristics," International Entrepreneurship and Management Journal, Springer, vol. 18(4), pages 1577-1604, December.

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    More about this item

    Keywords

    Channel stuffing; Related party transactions; Corporate governance; China’s listed companies;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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