Related Party Transactions and Firm Valuation: Cross-Country Evidence from East Asia

2013 ◽  
Author(s):  
Mohammad Mohid Rahmat ◽  
Kamran Ahmed ◽  
Gerald J. Lobo
Keyword(s):  
East Asia ◽  
Firm Valuation ◽  
Related Party Transactions ◽  
Cross Country

Regional Versus Global Risk Sharing in East Asia

2004 ◽  
Vol 3 (3) ◽  
pp. 182-201 ◽  
Author(s):  
Soyoung Kim ◽  
Sunghyun H. Kim ◽  
Yunjong Wang
Keyword(s):  
Regression Analysis ◽  
East Asia ◽  
Risk Sharing ◽  
East Asian ◽  
Developed Countries ◽  
Oecd Countries ◽  
Asian Countries ◽  
Global Risk ◽  
Cross Country ◽  
Degree Of Risk

This paper estimates the degree of risk sharing for each of 10 East Asian countries with countries in the region and with OECD countries by using cross-country consumption correlations and formal regression analysis. Risk sharing is found to be far from complete and quite low for most of the countries. Taiwan and Singapore have the highest risk sharing. Indonesia and Malaysia have the lowest (and significantly negative) risk sharing. The degree of risk sharing does not increase in most countries over 1970–2000. For the less-developed countries, potential gains from risk sharing would be larger with OECD countries than with East Asian countries.

IFRS related party transactions disclosure and firm valuation in the United Arab Emirates emerging market

2017 ◽  
Vol 7 (2) ◽  
pp. 173-189 ◽  
Author(s):  
Walaa Wahid Elkelish
Keyword(s):  
United Arab Emirates ◽  
Financial Reporting ◽  
Emerging Market ◽  
Market Competition ◽  
Negative Relationship ◽  
Firm Valuation ◽  
Control Variables ◽  
Content Type ◽  
Related Party Transactions ◽  
The Impact

Purpose The purpose of this paper is to investigate the relationship between related party transactions disclosure (RPTD) and firm valuation in the United Arab Emirates (UAE), an emerging market. Design/methodology/approach Data on study variables were obtained manually from the published financial statements of all listed companies in the stock market during the period 2008-2012. Panel regression analysis models with fixed and random effects were used to ensure reliability of results. Several robustness checks were undertaken on the study outcomes. Findings The empirical results show that there is a significant negative relationship between RPTD and firm valuation in the UAE. RPTDs for subsidiaries and associates have the most damaging impact on firm valuation. Other control variables such as corporate governance disclosure (CGD), debt to equity, asset tangibility and sales growth show significant impact on firm valuation. Research limitations/implications The potential difference in the understanding of what constitutes “related party” across companies may affect the extent of related party disclosure across companies. Furthermore, some variables are not controlled for such as ownership structure and cultural values. Practical implications This paper provides useful practical guidelines for regulatory agencies, corporate managers and other stakeholders for improving the financial reporting system. Originality/value RPTD was measured according to the International Financial Reporting Standards (IAS 24) standards. Furthermore, the impact of new control variables such as CGD and product market competition was tested for financial and non-financial sectors.

Do related party transactions affect earnings quality? Evidence from East Asia

2020 ◽  
Vol 28 (1) ◽  
pp. 147-166 ◽  
Author(s):  
Mohd Mohid Rahmat ◽  
Balachandran Muniandy ◽  
Kamran Ahmed
Keyword(s):  
Hong Kong ◽  
East Asia ◽  
Negative Impact ◽  
Earnings Quality ◽  
East Asian ◽  
Annual Reports ◽  
Asian Countries ◽  
Content Type ◽  
Related Party Transactions ◽  
And Performance

Purpose The purpose of this paper is to examine the effect of related party transactions (RPTs) and types of RPTs (complex, simple and loan) on earnings quality in four East Asian countries: Hong Kong, Malaysia, Singapore and Thailand. Design/methodology/approach RPTs and types of RPTs are measured using two approaches, magnitude and abnormal (magnitude change). Earnings quality is measured using proxies for accrual earnings management and identified as discretionary accruals (DAC) and performance matched discretional accruals (PMDAC). Findings The results suggest that firms in these countries experience poor earnings quality when they are engaged in RPT. The effect of RPT-simple on earnings quality is more severe than RPT-complex. However, the presence of higher investor protection and stricter enforcement of regulations in countries like Singapore and Hong Kong reduce the negative impact of RPTs on earnings quality. Research limitations/implications The results support the argument that the presence of controlling shareholders in East Asia is likely to lead to engagement with RPTs, which will increase the likelihood of firms’ earnings manipulation via DAC. This study has two limitations. It only focuses on Hong Kong, Malaysia, Singapore and Thailand, and the results may not be generalizable to other countries. Second, this study only measures the magnitude and abnormal RPTs based on the disclosures available in annual reports. Originality/value This paper contributes to the literature by examining the effect of RPTs and types of RPTs on earnings quality in four selected East Asian countries. 

Related Party Transactions, Value Relevance and Informativeness of Earnings: Evidence from Four Economies in East Asia

2020 ◽  
Vol 23 (01) ◽  
pp. 2050005
Author(s):  
Mohd Mohid Rahmat ◽  
Kamran Ahmed ◽  
Gerald J. Lobo
Keyword(s):  
Hong Kong ◽  
East Asia ◽  
Ownership Structure ◽  
Value Relevance ◽  
Earnings Quality ◽  
Accounting Earnings ◽  
Related Party Transactions ◽  
Sensitivity Tests ◽  
Negative Effect

We investigate the effect of related party transactions (RPTs) on value relevance and informativeness of accounting earnings for firms based in East Asia. Using a hand-collected sample of 398 listed companies comprising 1194 firm-year observations from Hong Kong, Malaysia, Singapore and Thailand, we find that firms engaging more extensively in RPTs have significantly lower value relevance and lower informativeness of earnings both in the current year and subsequent year than firms engaging less in RPTs. Furthermore, the results indicate that the types of RPTs affect value relevance and informativeness of earnings differently in that the effect of simple and loans RPTs are more negative than complex transactions. The extent of the negative effect of RPTs is lower in Hong Kong and Singapore where investor protection is higher compared to the other two economies. These findings are robust to controlling for firm-specific attributes, corporate governance, ownership structure, earnings quality, and a variety of sensitivity tests. These results are consistent with the conflict of interest view that RPTs compromise the quality of accounting earnings and this leads to the reduction in earnings and market value relationship for firms that engage in RPTs.

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