Related Party Transaction, Firm Performance and Institutional Ownership
This paper investigates the impact of related party transactions on a firm’s operating performance and market-based performance, as well as the impact of institutional ownership on the use of related party transactions. Using a sample of 1218 deals from S&P1500 firms from 2007 to 2018, we pro...
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Université d'Ottawa / University of Ottawa
2021
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ndltd-uottawa.ca-oai-ruor.uottawa.ca-10393-425372021-08-15T10:10:40Z Related Party Transaction, Firm Performance and Institutional Ownership Cui, Jingyu Dutta, Shantanu Related Party Transaction Firm Performance Institutional Ownership This paper investigates the impact of related party transactions on a firm’s operating performance and market-based performance, as well as the impact of institutional ownership on the use of related party transactions. Using a sample of 1218 deals from S&P1500 firms from 2007 to 2018, we propose and examine three relevant hypotheses: (a) related party transactions, especially, “Red-flag” related party transactions are negatively related to firm’s operating performance, (b) related party transactions, especially, “Red-flag” related party transactions are negatively related with firm’s marketbased performance, (c) institutional ownership is negatively related with related party transactions. In summary, we do not find a significant relationship between related party transactions and firm’s operating performance, such as ROA, Profit Margin and COGS. As for firm’s market-based performance, we found related party transactions are positively related with Tobin’s-Q, but are not significantly related with 12-months buy and hold abnormal return. Finally, we do not find any significant relationship between overall institutional investors and RPTs, but we find short-horizon institutional investors reduce the use of related party transactions, but long-horizon institutional investors do not limit the use of RPT 2021-08-13T17:47:35Z 2021-08-13T17:47:35Z 2021-08-13 Thesis http://hdl.handle.net/10393/42537 http://dx.doi.org/10.20381/ruor-26757 en application/pdf Université d'Ottawa / University of Ottawa |
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Others
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Related Party Transaction Firm Performance Institutional Ownership |
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Related Party Transaction Firm Performance Institutional Ownership Cui, Jingyu Related Party Transaction, Firm Performance and Institutional Ownership |
description |
This paper investigates the impact of related party transactions on a firm’s operating
performance and market-based performance, as well as the impact of institutional ownership on the use
of related party transactions. Using a sample of 1218 deals from S&P1500 firms from 2007 to 2018, we
propose and examine three relevant hypotheses: (a) related party transactions, especially, “Red-flag”
related party transactions are negatively related to firm’s operating performance, (b) related party
transactions, especially, “Red-flag” related party transactions are negatively related with firm’s marketbased performance, (c) institutional ownership is negatively related with related party transactions.
In summary, we do not find a significant relationship between related party transactions and
firm’s operating performance, such as ROA, Profit Margin and COGS. As for firm’s market-based
performance, we found related party transactions are positively related with Tobin’s-Q, but are not
significantly related with 12-months buy and hold abnormal return. Finally, we do not find any
significant relationship between overall institutional investors and RPTs, but we find short-horizon
institutional investors reduce the use of related party transactions, but long-horizon institutional
investors do not limit the use of RPT |
author2 |
Dutta, Shantanu |
author_facet |
Dutta, Shantanu Cui, Jingyu |
author |
Cui, Jingyu |
author_sort |
Cui, Jingyu |
title |
Related Party Transaction, Firm Performance and Institutional Ownership |
title_short |
Related Party Transaction, Firm Performance and Institutional Ownership |
title_full |
Related Party Transaction, Firm Performance and Institutional Ownership |
title_fullStr |
Related Party Transaction, Firm Performance and Institutional Ownership |
title_full_unstemmed |
Related Party Transaction, Firm Performance and Institutional Ownership |
title_sort |
related party transaction, firm performance and institutional ownership |
publisher |
Université d'Ottawa / University of Ottawa |
publishDate |
2021 |
url |
http://hdl.handle.net/10393/42537 http://dx.doi.org/10.20381/ruor-26757 |
work_keys_str_mv |
AT cuijingyu relatedpartytransactionfirmperformanceandinstitutionalownership |
_version_ |
1719460161729331200 |