Related Party Transactions, Earnings Management, and Corporate Governance

Sapulete, Angelina Gresela and Feliana, Yie Ke (2020) Related Party Transactions, Earnings Management, and Corporate Governance. In: The 2nd International Conference on Religious and Cultural Sciences, September 17, 2020, Online.

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Purpose: The purpose of this paper is to investigate the association of Related Party Transactions (RPTs) with Accrual Earnings Management (AEM) and Real Earnings Management (REM) and the role of corporate governance in moderating the association. Methodology: The methodology employed in this paper is the empirical positivism approach. Analysis data used linear regression and logistic regression testing for manufacturing and trade industry sector firms in the 2017-2018 period of times. Result: The result indicates that (1) RPTs have a significant positive association on REM as measured by abnormal production costs and abnormal discretionary expenses, and (2) Good corporate governance is weakening the positive association between RPTs and REM as measured by the abnormal production costs. Originality: This paper contributes to enhancing the earnings management literature by adding related party transactions as a tool to do earnings management, also the result supports the role of corporate governance to mitigate the opportunistic motive of doing RPT. Implication: This result provides a suggestion to investors and policy-making bodies to scrutinize the company motive in doing RPT, and tightened control through corporate governance mechanism.

Item Type: Conference or Workshop Item (Paper)
Uncontrolled Keywords: Related party transactions; earnings management; accrual earnings management; real earnings management; corporate governance
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Divisions: Faculty of Business and Economic > Department of Accounting
Depositing User: Yie Ke Feliana 3193
Date Deposited: 05 Oct 2021 03:47
Last Modified: 05 Oct 2021 03:47

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