ARTÍCULO
TITULO

Earnings Management: A Case of Related Party Transactions

Zaharaddeen Salisu Maigoshi    
Rohaida Abdul Latif    
Hasnah Kamardin    

Resumen

This study was conducted on the related party transaction and earnings management. Agency theory provides that managers may engage into self-enrichment transactions to maximize their benefits at the detriment of the shareholders of the firm. Though, management or concentrated ownership was suggested as the possible solution to this problem, this form of ownership structure has its peculiar problems which are termed as type II agency problem. Controlling shareholders are found to be using their voting power to extract extra benefits from the firm through the insider information and in many instances engage in detrimental related party transactions at the expense of minority shareholders. This study have identified how and why controlling shareholders or managers use related party transaction as a means to perpetrate accrual-based or real activity earnings management. It was recommended that empirical study be conducted to investigate whether disclosure regulation can constrain the controlling shareholders or management against the use of real-activity management through related party transaction.Keywords: Related Party Transactions, Accrual-Based Earnings Management and Activity-Based Earnings Management.JEL Classifications: G34, G38, G180

 Artículos similares

       
 
Syed Akif Shah,Umara Noreen     Pág. 461 - 472
Despite years of empirical research, the linkage between dividend policy and stock price volatility remains controversial among the researchers and scholars. This research endeavors to figure out the relationship between stock price volatility and divide... ver más

 
Dedhy Sulistiawan     Pág. 179 - 188
This study discusses technical analysis signal and earnings-announcements timing. Technical analysis signal is used to capture price reaction around earnings announcement dates. Technical analysis is selected because it is potential for competing in... ver más

 
Nadia Mans-Kemp,Suzette Viviers    
AbstractThe issue of board diversity has been widely debated. Given the lack of conclusive empirical evidence, this study investigated the relationship between gender and race board diversity and the financial performance of South African companies. The ... ver más