Related Party Transaction

The purpose of this paper
is to measure the level of related
party transaction disclosures
and to examine the factors that
aect the disclosures of related
party transactions from the
perspective of the Bangladeshi
listed cement companies
between the periods of
2012-2016. A manual index was
constructed by considering the
disclosure requirements of
International Accounting
Standard (IAS) -24. The financial
statements of the selected
companies were used for the
analysis. A relatively low level of
related party transaction
disclosures have been found.
Besides, the multiple regression
analysis (OLS) represents that
there is a significant relationship
between RPTD and the
leverage, product market
competition, return on asset and
foreign ownership. Furthermore,
several corporate governance
variables such as product
market competition, ownership
structure, and audit quality were
tested in this study.

In Turkish law there are two main regulations on “concealed distribution of capital”; one is in 6362 numbered Capital Markets Law and the other one is in 5520 numbered Corporate Tax Law. Concealed distribution of capital regulation is a subject that is transferred from the corporate tax law system to the capital markets law system. Although there are many court decisions and academic studies on the corporate tax law’s concealed distribution of capital regulation, it is not possible to state the same for the capital markets law regulation. This eventually makes it necessary to use a comparative method and to evaluate the capital markets law regulation by comparing it with the corporate tax law regulation. In this study, concealed distribution of capital subject is examined by comparing both laws’ regulations and by focusing on publicly-held joint stock corporations as these are the most important legal structures that are in the scope of both regulations.
As many people have interests connected with publicly- held joint stock corporations, activities of concealed distribution of capital which are carried out via these corporations affects many people. In Turkey, the number of publicly-held corporations and the money invested in these are increasing every year. Therefore, it is possible to say that the number of concealed distribution of capital activities will increase and thus the importance of this study will also increase in the near future.
“Transaction” and “associated persons” terms are the main determinants that determine if an activity is a concealed distribution of capital or not. As concealed distribution of capital regulations which are in capital markets law and corporate tax law have similarities, an activity that can be stated as a concealed distribution of capital sometimes can also be stated as a concealed distribution of capital for the other law. In this study, “transaction” and “associated persons” terms are evaluated from both laws’ aspects by comparing and evaluations are carried out on the similarities and intersections of these laws.

The primary objective of this study is to investigate whether stock price reactions in response to investment announcements made by firms listed on the Indonesian Stock Exchange (JSX) depend on 1) the nature of relation between transacting parties (Related Party Transaction (RPT) or Non-Related Party Transaction (Non-RPT)); and 2) the type of firms (part of group affiliation or not). This study constitutes an event study, i.e., to examine cumulative abnormal returns (CAR) surrounding the date of investment announcements. The study finds that the stock price reaction (as measured by CAR) for RPT is lower than that for Non-RPT. Therefore, the market perceives that RPT is subject to wealth expropriation by controlling shareholders to minority shareholders, and that this perception is eventually reflected in the relatively lower market reaction. Further, the study finds (albeit weak) that the stock market reaction for firms in group affiliations is lower than for those in non-group affiliations. Under the condition of inadequate supervision and ineffective law enforcement, firms in group affiliations can easily conduct expropriation without being concerned about being detected by the regulator.

The view that the main objective of the corporation is the maximization of profit and value for shareholders has over time given way to the stakeholder theory. Because of the theory and the interest of other stakeholders, and several other corporate governance principles, like the principle on related party transactions have evolved. Yet corporate success continues to be evaluated and measured principally on concepts like return on investment, dividends, earnings per share and related concepts which depict the shareholder value theory. Both views appear to be locked in an eternal combat as society evolves and the principles of sound corporate governance become more entrenched. It is argued that corporate governance principles over time contribute to the financial value of the company. This paper looks at the relationship between the corporate governance principle on related party transaction and the need for a company to take benefit of corporate commercial opportunities. It will review the basis for the principle, the two historical hypotheses and arguments about it, the legal and other regulatory provisions governing it, its practical application, and whether it does or does not negatively impact the ability of companies to exploit corporate opportunities to improve profitability.

The primary purpose of this study is to investigate the impacts of Earnings Management (EM) and Related Party Transactions (RPTs) on corporate financial performance in an emerging mar-ket called Iran. This paper also aims to examine the moderating role of Internal Control Weak-ness (ICW) in the relationship between them. The study sample includes 108 Iranian manufac-turing companies listed on the Tehran Stock Exchange (TSE) between 2013 and 2018, and panel data with random effects are used to test the hypotheses. When an accounting-based measure called ROA is defined as a proxy for corporate performance, the results show that there is a neg-ative association between Real Earnings Management (REM) and corporate financial situation, while Accrual-based Earnings Management (AEM) and firm value are correlated positively. However, when Tobin’s Q index is defined as a proxy for corporate performance, we do not find any significant association between them. Consistent with the tunneling hypothesis or agency theory, our findings confirm RPTs damage corporate value (ROA & Tobin’s Q) because managers probably consider it a mechanism to exploit enterprise resources owing to existing conflictual interests. Moreover, purchase-related party transactions lead to lower ROA, whereas sale-related party transactions and Tobin’s Q are correlated negatively. Moreover, weak internal control has a positive moderating influence on the linkage between AEM and Tobin’s Q index. Finally, we provide robust evidence that there is a positive association between sale growth and institution-al owners with ROA and Tobin’s Q, although financial leverage and Mergers & Acquisitions (M&A) have a destructive effect on corporate value.

This research aims to test the related party transaction influence, company size and managerial ownership of profit management. The research also aims to test the influence of independent Commissioner's interaction on the factors of the earning management determinant. The samples used in this study were the manufacturing companies listed in the Indonesian Stock Exchange (IDX) during the period 2014 and 2015. Total samples amounted to 25 companies using the purposive sampling technique. The analysis method uses multiple regression and moderating regression with an absolute value-difference approach. The results of hypothesized testing showed that related party transactions had significant positive impact on earning management. Company size and Manejerial ownership have significant negative effect on earning management. In addition, the results showed that independent commissioners were interfering with the influence of the company's size on profit management, as well as independent commissioners to However, independent commissioners do not Interveny related party transactions against earning management.

reactions in response to investment announcements made by firms listedon the Indonesian Stock Exchange (JSX) depend on 1) the nature of relationbetween transacting parties (Related Party Transaction (RPT) or Non-Related Party Transaction (Non-RPT)); and 2) the type of firms (part ofgroup affiliation or not). This study constitutes an event study, i.e., toexamine cumulative abnormal returns (CAR) surrounding the date ofinvestment announcements. The study finds that the stock price reaction(as measured by CAR) for RPT is lower than that for Non-RPT. Therefore,the market perceives that RPT is subject to wealth expropriation bycontrolling shareholders to minority shareholders, and that this perceptionis eventually reflected in the relatively lower market reaction. Further, thestudy finds (albeit weak) that the stock market reaction for firms in groupaffiliations is lower than for those in non-group affiliations. Under thecondition of inadequate supervision and ineffective law enforcemen...

The dissertation offers a comprehensive description of rules and regulations on Related Party Transactions (RPTs) and corporate groups in Ukrainian corporate law. Besides Ukraine, the following jurisdictions were chosen for analysis: the Netherlands, Germany, Poland and the EU overall. The author investigates how and to what extent RPTs are covered by the existing legal requirements on capital protection and corporate group regulation, highlighting experiences and strategies adopted in the studied jurisdictions. Beyond his comparative analysis of the current status, the author offers recommendations for more effective handling of RPTs in Ukraine, investigating such aspects as the following: what constitutes a corporate group and how group issues are regulated in the various legal systems; what constitutes a conflict of interest originating in ownership and control and what types of such conflicts occur; whether RPTs within corporate groups should receive special treatment relative to transactions outside groups; combatting corporate raiding, most often carried out through illegal seizure of corporate assets; approval and disclosure requirements for RPTs; and how information about RPTs is disclosed publicly.Coherent privaatrech

The book offers a comprehensive description of rules and regulations on Related Party Transactions (RPTs) and corporate groups in Ukrainian corporate law. Besides Ukraine, the following jurisdictions were chosen for analysis: the Netherlands, Germany, Poland and the EU overall. The author investigates how and to what extent RPTs are covered by the existing legal requirements on capital protection and corporate group regulation, highlighting experiences and strategies adopted in the studied jurisdictions. Beyond his comparative analysis of the current status, the author offers recommendations for more effective handling of RPTs in Ukraine, investigating such aspects as the following: what constitutes a corporate group and how group issues are regulated in the various legal systems; what constitutes a conflict of interest originating in ownership and control and what types of such conflicts occur; whether RPTs within corporate groups should receive special treatment relative to transactions outside groups; combatting corporate raiding, most often carried out through illegal seizure of corporate assets; approval and disclosure requirements for RPTs; and how information about RPTs is disclosed publicly.