The Determinants of the Related Party Transactions’ occurrence: an Empirical Study on Firms Listed in the Egyptian Stock Exchange

Document Type : Original Article

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Accounting department Faculty of Commerce Damnhour University

Abstract

This research sheds the light on the Related Party Transactions (RPTs) topic. It aims to identify the determinants of the RPTs’ occurrence using a sample of firms listed in the Egyptian Stock Market. This research tests the hypotheses using the Multiple Regression Model to identify the determinants of the RPTs’ occurrence. With respect to the corporate governance factors, empirical results show that the governmental ownership, the number of the non-executive in the board, and the separation between the chairman of the board and the CEO have negative effects on the firm’s RPTs, while the ownership concentration has a positive relationships with the firm’s RPTs. With respect to the firm’s operational characteristics, empirical results show that the firm’s size has a positive relationship with the firm’s RPTs in case of an emerging capital market such as Egypt. Lastly, there is an obvious need to improve the regulation of the RPTs and its disclosure requirements to limit the negative practices which are unwanted.

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