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Board diversity and related party transactions

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  • Al-Dah, Bilal
  • Dah, Mustafa A.
  • El-Helaly, Moataz

Abstract

We examine the relation between board diversity and Related Party Transactions (RPTs), as well as the consequent impact on firm performance. We posit that board diversity has a favorable influence on RPTs and their value implications. Our results suggest that board diversity is positively (negatively) related to the likelihood of Business (Non-Business) RPT engagements. Moreover, board diversity enhances the positive impact of Business RPTs on firm performance while mitigating the negative effects of Non-Business RPTs. Overall, our findings support theories on the motivations behind different types of RPTs and highlight the essential role of board diversity in elevating internal monitoring.

Suggested Citation

  • Al-Dah, Bilal & Dah, Mustafa A. & El-Helaly, Moataz, 2025. "Board diversity and related party transactions," Finance Research Letters, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325003101
    DOI: 10.1016/j.frl.2025.107046
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    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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