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The impact of related party transactions on firm value: Evidence from a developing country

Ahmed A. Diab (Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt and Department of Accounting, College of Business Administration, Prince Sultan University, Riyadh, Saudi Arabia)
Ahmed Aboud (Portsmouth Business School, University of Portsmouth, Portsmouth, UK and Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt)
Arafat Hamdy (Faculty of Commerce, Beni-Suef University, Beni Suef, Egypt)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 2 September 2019

Abstract

Purpose

The purpose of this study is to address the impact of the related party transactions (RPTs) on firm value. The authors bring evidence from a usually ignored empirical setting: an African emerging market.

Design/methodology/approach

In particular, the authors focus on companies listed on the Egyptian stock market using a sample of EGX 30 from 2012 to 2017.

Findings

Unlike the literature, the authors find no significant relationship between RPTs and market value.

Practical implications

This research provides insights for policymakers and other interested parties concerning the perception of RPTs in Egypt.

Originality/value

The reported different findings of this study assure the intermediary role of the context and the local culture in the relationship between RPTs and firm value, in contrast to the negative view that is mostly reported in the literature.

Keywords

Citation

Diab, A.A., Aboud, A. and Hamdy, A. (2019), "The impact of related party transactions on firm value: Evidence from a developing country", Journal of Financial Reporting and Accounting, Vol. 17 No. 3, pp. 571-588. https://doi.org/10.1108/JFRA-08-2018-0064

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited