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

Yenpao Chen (), Chien-Hsun Chen () and Yu-Ting Wu ()
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Yenpao Chen: Soochow University
Yu-Ting Wu: Deloitte & Touche

International Journal of Disclosure and Governance, 2019, vol. 16, issue 2, 116-127

Abstract: 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.

Keywords: Channel stuffing; Related party transactions; Corporate governance; China’s listed companies (search for similar items in EconPapers)
JEL-codes: D21 G34 P31 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1057/s41310-019-00061-1

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