Empirical Studies in Financial Accounting

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Memorandum of Understanding

Article Writing Guide

Files

Consultants

Consultants

Consultants

Consultants

Consultants

Publons

The relationship between corporate governance and related party transactions

Document Type : Research Paper

Authors

1 Academic Member of Shahid Beheshti University, email: hosein470@gmail.com

2 Master of Accounting, Shahid Beheshti University

Abstract

One of the concepts which recently have been discussed a lot by corporate
governance regulators and standard setters is related party transaction. Related party
transaction due to the complexity in recognition and disclosure are considered to be
one the challenges of financial reporting which can influence economic decisions of
users. Considering the expansion of related party transactions and the increase of
them in companies, it is necessary to create monitoring mechanisms to reduce the
financial frauds and to improve the performance. Among these types of monitoring
mechanisms, stablishing and performing of proper corporate governance system in
companies is one of these mechanisms. The empirical evidences show that corporate
governance lessens related party transaction. In this research, the relationship
between the mechanisms of corporate governance and related party transactions is
investigated. The study sample includes 136 Tehran Stock Exchange listed
companies from 1389 to 1393. In order to test the research hypotheses, the multivariable
regression model with a data panel was used. The board members
independences, boards compensation, stock ownership, change of executive
manager, auditor rotation were used as the corporate governance mechanisms. The
result of the research indicates that there is a significant and reverse relation between
related party transaction and ownership of the institutional stockholders and change
of executive manager. There is a reverse relation between related party transaction
and autonomy of board of managers’ members but this reverse relation is not
significant statistically. There is a direct and significant relation between related
party transaction and board of managers’ compensation and there is a direct relation
between related party transaction and auditor rotation, which is not significant
statistically.

Keywords

References
- اسماعیل زاده مقری، علی؛ جلیلی، محمد و زند عباس آبادی، عباس. (1389). بررسی تاثیر حاکمیت شرکتی بر کیفیت سود در بورس اوراق بهادار تهران. مجله حسابداری مدیریت، سال سوم، شماره 7.
- بولو، قاسم؛ کیهان، مهام و گودرزی، اسماعیل. (1389). تغییر حسابرس مستقل و شفافیت اطلاعاتی شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران. فصلنامه دانش حسابداری، شماره 1، ص 135-111.
- پناهی، مسعود. (1392). بررسی رابطه بین معاملات با اشخاص وابسته و مالکیت نهادی (بلندمدت و کوتاه­مدت) و ترکیب هیئت مدیره شرکت­ها. پایان­نامه کارشناسی ارشد دانشگاه آزاد اسلامی قزوین.
- حساس یگانه، یحیی؛ شعری، صابر و خسرو نژاد، سیدحسین. (1387). رابطه سازوکارهای حاکمیت شرکتی، نسبت بدهی‌ها و اندازه شرکت با مدیریت سود. مطالعات تجربی حسابداری مالی، شماره 24، ص 115-79.
- حمیدی، الهام و شعری، صابر. (1391). شناسایی انگیزه­های معاملات با اشخاص وابسته. پژوهش­های تجربی حسابداری، سال دوم، شماره 6، ص 67-49.
- دارابی، رویا و محمود، داود خانی (1394). بررسی تاثیر معاملات با اشخاص وابسته بر ارزش شرکت های پذیرفته شده در بورس اوراق بهادار تهران. پژوهش های حسابداری مالی و حسابرسی. ش 28. 131-152.
- رضایی، فرزین و قمری، سمیه. (1393). بررسی تاثیر مکانیزم­های حاکمیت شرکتی بر رابطه بین معامله با اشخاص وابسته و عملکرد شرکتهای پذیرفته شده در بورس اوراق بهادار تهران. کنفرانس بین­المللی حسابداری، اقتصاد و مدیریت مالی.
- رضایی، فرزین و جهاندیده، حسین. (1393). معاملات با اشخاص وابسته، مجله بورس، شماره 116، ص 83-77.
- سهرابی نودهی، فاطمه. (1392). ارتباط بین ساختار مالکیت، نقش دوگانه مدیرعامل و معاملات با اشخاص وابسته در شرکتها. پایان­نامه کارشناسی ارشد، دانشگاه آزاد اسلامی.
- شعری، صابر و حمیدی، الهام. (1390). کفایت افشای معاملات با اشخاص وابسته. مطالعات تجربی حسابداری مالی، شماره 33، ص 57-39.
- Adams, I. (2003). The Morality of Corporate Governance: Issues of Quality and Quantity. Paper Presented at The Conference of the Economic Society of South Africa, 17-19 September, Africa.
- AICPA. (2001). Staff of the American Institute. American Institute of Certified Public Accountants, New York.
- Berle, A. and Means, G. (1932). The Modern Corporation and Private Property. Macmillan, New York.
- Benjamin, E. (2009). Corporate governance structure and firm performance in developing economies: evidence from Nigeria. Corporate Governance: The international journal of business in society, Vol. 9, pp.231-244.
- Bennouri, M., Nekhili, M. and Touron, P. (2015). Does Auditors’ Reputation ‘Discourage’ Related Party Transactions? The French Case. AUDITING: A Journal of Practice & Theory, Vol. 34, pp. 1-32.
- Cheung, Y., Jing, L., Lu T., Rau P. R. and Stouratis, A. (2009). Tunnelling and Propping Up: An Analysis of Related Party Transactions by Chinese Listed Companies, Pacific-Basin Finance Journal, Vol. 17, PP. 372–393.
- Chung K. H. and Zhang, H. (2011). Corporate Governance and institutional Ownership. Journal of Financial and Quantitative Analysis, Vol. 46, pp. 247-273.
- Cameron, M., Prencipe, A. and Trombetta, M. (2008). Earnings management, audit tenure and auditor changes: Does mandatory auditor rotation improve audit quality?. Working paper, University Boncconi, Madrid.
- Duprey, R. (2006). The Minefield of Related- Party Transactions. Working paper, Available at:  http://www.fool.com/investing/general/2006/04/27/the-minefield-of-relatedparty-transactions.aspx.
- Fernandese, N. (2008). EC: Board compensation and firm performance: The role of independent board members. Journal of multinational financial management, Vol. 18, PP. 30–44.
- Frank, J. and Mayer, C. (2004). Corporate Ownership and Control in the UK, Germany and France. Journal of Applied Corporate Finance, Vol. 9, PP. 30–45.
- Franks, J. and Mayer, C. (1994). The Ownership and Control of German Corporations.  Review of Financial Studies , Vol. 14, pp. 943-977.
- Hermalin, B. and Weisbach, M. (2003). Endogenously chosen boards of directors and their monitoring of the CEO. American Economic review, Vol. 88, PP. 96-118.
- Henry, E., Gordon, E., Reed, B. and Louwers, T. (2007). The role of related party transactions in fraudulent financial reporting. Available at: http://ssrn.com/abstract=993532.
- Iqbal, Z. and Mirakhor, A. (2004). Stakeholders Model of Governance in Islamic Economic System.  Islamic Economic Studies, Vol 11, PP. 43-64.
- Jian, M. and Wong, J. (2010). Propping through Related Party Transactions. Review of Accounting Studies, Vol. 15, pp. 70-105.
- Jensen, M. and Meckling, W. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.  Journal of Financial Economics, Vol. 3, PP. 305-360.
- Kuan, L., Tower, G., Rusmin, R., and Mitchell, J. (2010). Related Party Transactions and Earnings Management. Journal Akuntansi & Auditing Indonesia, Vol. 14, PP. 93–115.
- Kohlbeck, M. and Mayhew, B. (2004). Agency Costs, Contracting and Related Party Transactions. Available at:http://ssrn.com/abstract=592582.
- Kim, J. H and Woo, Y. S (2008). The Effect of Transcations to the Related-Party on the Earnings Management and the Earnings Response Coefficient. Korean Accounting Review, Vol.  33, PP. 25-59.
- Lobo, G. J., Kanagaretnam, K. and Whalen, D. J. (2007). Does good corporate governance reduce information asymmetry around quarterly earnings announcements?. Journal of Accounting and Public Policy, Vol. 26, PP. 497-522. 
- Minnick, M. and Noga, T. (2010). Do corporate governance characteristics influence tax management? Journal of Corporate Finance, Vol. 16, PP. 703-718.
- Maug, E. (1997). Boards of directors and capital structure: Alternative forms of corporate restructuring. Journal of Corporate Finance, Vol. 3, PP. 113-139.
- Muth, M. and Donaldson, L. (1998). Steward theory and board structure: A contingency approach. Corporate Governance: An International Review, Vol. 6, PP. 5–28.
- Parkinson, J. (1994) "Corporate Power and Responsibility: Issues in the Theory of Company Law. Oxford University, Oxford.
- Short, H., Keasey, K., Hull, A. and Wright, M. (1998). Corporate Governance, accountability, and enterprise, Corporate Governance. An International Review, Vol. 6, PP. 151-165.
- Shleifer, A. and Vishny, R. (1886). Large Shareholders and Corporate Control. Journal of Political Economy, Vol. 94, PP. 88-142.
- Shah ,A. and Ullah, H. (2015). Related Party Transactions and Corporate Governance Mechanisms: Evidence from firms listed on the Karachi StockExchange. Pakistan Business Review, Vol. 17, pp. 663-680.
- Ullah, H. and Shah, A. (2015). Related Party Transactions and Corporate Governance Mechanisms: Evidence from Firms Listed on the Karachi Stock Exchange. Pakistan Business Review, Vol. 17, pp. 663-680.
Empirical Studies in Financial Accounting
Volume 14, Issue 53
April 2017
Pages 143-172
Files
History
  • Receive Date: 09 November 2016
  • Revise Date: 13 November 2017
  • Accept Date: 08 April 2017
Share
How to cite
Statistics