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Does market competition foster related party transactions? Evidence from emerging market

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  • Bansal, Shashank
  • Singh, Harminder

Abstract

We examine the impact of market competition on related party transactions (RPTs). Using a sample of 12,794 firm-year observations from listed Indian firms, we find that market competition has a positive impact on the usage of RPTs, and this effect is greater in firms that have a low level of monitoring and profitability. We find that firms in a competitive environment engage in a greater amount of business RPTs in comparison to non-business RPTs. Business group firms in competitive industries use RPTs significantly more than standalone firms. We also find that in a competitive market, RPTs are positively related to firm value.

Suggested Citation

  • Bansal, Shashank & Singh, Harminder, 2023. "Does market competition foster related party transactions? Evidence from emerging market," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).
    • Handle: RePEc:eee:pacfin:v:77:y:2023:i:c:s0927538x22002049
    DOI: 10.1016/j.pacfin.2022.101909
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    Keywords

    Related party transactions; Market competition; Emerging markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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