Valuation of firms that disclose related party transactions

Kohlbeck, Mark J.; Mayhew, Brian W.

doi:10.1016/j.jaccpubpol.2009.10.006

Cited by 191 publications

(253 citation statements)

References 41 publications

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“…Appropriate disclosure of RPTs is considered vital for financial statement users to make decision and understand the impacts of the transaction on the company [10]. There are two conflicting impacts of RPTs.…”

Section: The Importance Of Rpts Disclosuresmentioning

confidence: 99%

“…The lower valuation of RPTs observed in the 2002 -2007 sample is not observed in the period after the adoption of IFRS. Reference [10] examines the valuation of firms that disclose RPTs prior to the Sarbaney-Oxley Act ban on RP loans. They classify RPTs into three categories; loans, other simple transactions and complex strategic transactions.…”

Section: The Importance Of Rpts Disclosuresmentioning

confidence: 99%

“…One of the main reasons would be that while the accounting standard is very much a principle-based approach, the stock exchange regulations are rule-based approach. Reference [10] indicates that many companies do not report RPTs in the financial statement, but choose to disclose RPTs in their annual proxy statements. The differences in the disclosure can be explained by materiality based on monetary levels.…”

Section: Issues On Rpts Disclosurementioning

confidence: 99%

“…For example, analysis on RPTs in the proxy statements shows that RPTs vary according to transaction type [10]. Different types of RPTs require different level of disclosures, especially when the disclosure is associated with different underlying incentives and has differential effect on the firm.…”

Section: Issues On Rpts Disclosurementioning

confidence: 99%

“…They suggest that manipulation of information disclosure may be used by controlling shareholders to conceal expropriation. Reference [10], which classifies RPTs into loans, other simple transactions and complex strategic transactions, find that market perceptions differ according to types of RPTs and the related parties. They find that market views firms that disclose RP loans and other simple transaction with a director, officer, and shareholders negatively, but disclosure of complex RPTs and RPTs with firm investments is not associated with valuations or returns.…”

Section: Issues On Rpts Disclosurementioning

confidence: 99%

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The Breadth and Depth of Related Party Transactions Disclosures

Ariff¹,

Hashim²

2013

IJTEF

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Abstract-This paper reviews the existing requirement on related party transactions (RPTs) disclosure in the Malaysian context and discusses issues surrounding such disclosure. As there are two conflicting effects of RPTs, sufficient information should be made available to assist investors in analyzing the risk and return of RPTs. We review prior studies and highlight issues of information disclosure related to RPTs, such as the variations in the level of RPTs disclosure. We propose future research on RPTs to apply content analysis using a voluntary disclosure index to understand more about the breadth and depth of the RPTs information.

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Section: The Importance Of Rpts Disclosuresmentioning

confidence: 99%

Section: The Importance Of Rpts Disclosuresmentioning

confidence: 99%

Section: Issues On Rpts Disclosurementioning

confidence: 99%

Section: Issues On Rpts Disclosurementioning

confidence: 99%

Section: Issues On Rpts Disclosurementioning

confidence: 99%

See 3 more Smart Citations

The Breadth and Depth of Related Party Transactions Disclosures

Ariff¹,

Hashim²

2013

IJTEF

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Related‐party transactions and corporate performance following the adoption of International Financial Reporting Standards in Taiwan

Wang

Kweh

et al. 2019

Manage Decis Econ

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We explore the association between related‐party transactions and the efficiency of Taiwanese electronics companies following the adoption of International Financial Reporting Standards (IFRS) for the period 2010–2018. Tests of differences in mean showed that the efficiency and related‐party transactions of the sample companies were significantly lower in the post‐IFRS era. Regression results indicated that related‐party transactions have significantly positive effects on efficiency; however, this positive association turned out to be smaller following the adoption of IFRS in Taiwan. Overall, this study suggests that changing accounting policy and rules can significantly affect related‐party transactions in companies, and ultimately corporate performance.

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