Abstract
Transactions between a firm and its own managers, directors, principal owners or affiliates are known as related party transactions. Such transactions, which are diverse and often complex, represent a corporate governance challenge. This paper initiates research in finance on related party transactions, which have implications for agency literature. We first explore two alternative perspectives of related party transactions: the view that such transactions are conflicts of interest which compromise management's agency responsibility to shareholders as well as directors' monitoring functions; and the view that such transactions are efficient transactions that fulfill rational economic demands of a firm such as the need for service providers with in-depth firm-specific knowledge. We describe related party transactions for a sample of 112 publicly-traded companies, including the types of transactions and parties involved. This paper provides a starting point in related party transactions research.
| Original language | English |
|---|---|
| Title of host publication | Corporate Governance |
| Publisher | JAI Press |
| Pages | 1-27 |
| Number of pages | 27 |
| ISBN (Print) | 0762311339, 9780762311330 |
| DOIs | |
| Publication status | Published - 2004 |
Publication series
| Name | Advances in Financial Economics |
|---|---|
| Volume | 9 |
| ISSN (Print) | 1569-3732 |
Bibliographical note
Funding Information:We thank an anonymous referee and Anil Makhija (Editor) for helpful comments. The authors gratefully acknowledge the Rutgers Business School Research Resources Fund for providing support for this project.
Funding
We thank an anonymous referee and Anil Makhija (Editor) for helpful comments. The authors gratefully acknowledge the Rutgers Business School Research Resources Fund for providing support for this project.
| Funders | Funder number |
|---|---|
| Rutgers Business School Research Resources Fund |
ASJC Scopus Subject Areas
- Accounting
- Finance
- Economics, Econometrics and Finance (miscellaneous)