Abstract: This paper selects 65 listed companies which did not get standard auditing opinion because of related party transactions as samples of the year, 2005. By setting up regression model with four independent variables, we verify the relationship between resources diverted away from listed companies by related parties and earnings management or controlling right of the biggest stockholder. This study has findings as follows: first, the resources being diverted away from listed companies by related parties are positive correlated with listed companies'earnings management , controlling right of the biggest stockholder and innovation of stock right; second, the resources being diverted away from listed companies by related parties are positive correlated with listed companies'assets size. On the basis of the findings, this paper puts forward suggestions on the relevant policy: first，we need regulate listed companies which did not get standard auditing opinion because of related party transactions with emphasis; second, we should reduce state's shareholding accompany of increasing current-shareholding when we reform shareholding's circulation problem and let all shares circulate; third, we may carry out the system of decrease progressively votes; fourth, we can provider the lowest percent of shares when shareholders resolute in shareholder's meeting.