Related Party Transactions,Asset Specificity and the Behavior of the Controlling Shareholders:A Case Study on Renhe and Tianmu

Based on the asset specificity theory,this paper conducts a case study to investigate the positive effect of related party transactions between the listed companies and their controlling shareholders.By comparing two pharmaceutical companies in China,Renhe and Tianmu,it comes to a conclusion that if the controlling shareholders engage in the specific related party transactions with the listed companies,their exploitation of gains will be constrained due to the bundling-up effect.If there are few specific related party transactions with the controlling shareholders,there will be no effective binding,and therefore the risk of asset tunneling will occur.The conclusions are important reference for the improvement of corporate governance of listed companies and regulatory policies on related party transactions made by regulatory agencies.