Related Party Transactions and Protection of Minority Shareholders

Trivun, Veljko; Silajdi, Vedad; Mahmutehaji, Fatima; Mrgud, Mia

doi:10.5848/apbj.2012.00066

Cited by 3 publications

(2 citation statements)

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“…A negative connection between RPT and performance has also been found in Asian companies with poor monitoring mechanisms (Chen and Chien, 2007). Other researchers focus their attention on the relationship between RPT and CG or market behavior (Barua et al , 2010; Ge et al , 2010; Hu et al , 2012; Liu and Lu, 2007; Moscariello, 2011; Nekhili and Cherif, 2009; Trivun et al , 2012; Yeh et al , 2012).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Related party transactions disclosure and procedures: a critical analysis in business groups

Marchini

Andrei

Medioli

2019

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Purpose In the light of the risks involved in related party transactions, transparent disclosure is particularly important. The impact of related party transactions is relevant for all types of company, but there is greater complexity in business groups where they can be easier to hide. Focusing on business groups, this study aims to analyze the accuracy and transparency of related party transaction information, its understandability, compliance with legislation and comparability. It also examines whether shareholders can be fully informed of all related party transactions by reading only the consolidated financial statement. Design/methodology/approach Three case studies are used. The units of analysis are three corporate groups in which the parent company is listed on the Milan Stock Exchange as of 1 July 2015. The authors use two different sets of information. The first is secondary data from company procedures, annual reports and other official documents. They analyzed the separate financial statement of each firm, including the separate financial statement of the parent company and compared all relevant information from the consolidated financial statement and the separate financial statement. The second set is primary data from face-to-face semi-structured interviews and observation. Findings This study underlines that there is no requirement for a specific classification of related party transactions disclosure, and as a consequence, it is not possible to compare information. An unambiguous framework for disclosure, established by regulation or legislation, for use by companies supplying related party transactions information would be useful. Originality/value The results offer possible recommendations for regulators to improve presentation of related party transaction information without increasing the amount of information required.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Related party transactions disclosure and procedures: a critical analysis in business groups

Marchini

Andrei

Medioli

2019

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“…RPT and performance are negatively related also in Asian companies with poor monitoring mechanisms (Chen and Chien, 2007). Other prior literature analyzes the relationship between RPT and CG or market behavior (Ge et al, 2010;Trivun et al, 2012).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Related party transactions, corporate governance and earnings management

Marchini

Mazza

Medioli

2018

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Purpose Following the contingency perspective, this paper aims to examine if a good corporate governance structure is able to reduce earnings management made through related party transactions. The authors expect that a high-quality corporate governance influences private benefit acquisition and reduces the positive association between related party transactions and earnings management. Design/methodology/approach A two-stage least squares instrumental variable approach is used to further address endogeneity concerns in this study. The model is organized into three parts: the construction of the corporate governance indicator, the first stage regression to compute the predicted corporate governance indicator and the second stage regression (ordinary least squares multivariate regressions) to analyze the relationship between related party transactions and earnings management. The analysis focuses on a sample of Italian listed companies over the period 2007-2012. Findings The study finds that the interaction between sales-related party transactions and corporate governance is negatively associated with abnormal accruals, signaling that corporate governance quality reduces the positive association between sales-related party transactions and earnings management, consistently with the contingency perspective. Originality/value The research contributes to literature by empirically testing the assumption of contingency perspective. In particular, the results provide new insights to the academic community, underlying that good corporate governance mechanism helps to reduce earnings management behavior through related party transactions.

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