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Related parties transactions and firm's market value: the French case

Author

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  • Mehdi Nekhili

    (URCA - Université de Reims Champagne-Ardenne)

  • Moez Cherif

    (LIFIA - Laboratoire d'Informatique Fondamentale et d'Intelligence Artificielle - INPG - Institut National Polytechnique de Grenoble)

Abstract

Main shareholders, directors and managers can expropriate minority shareholders by carrying out certain transactions with the company. The objective of this article is to study the impact of these transactions on the value of the company, and to identify the ownership and governance characteristics of companies that engage in this type of transaction. The results of the regressions carried out on a sample of 85 companies listed on the Paris Stock Exchange during the period 2002-2005 show that related party transactions are mainly influenced, to various degrees, by the voting rights held by the main shareholder, the size of the board of directors, the degree of independence enjoyed by the audit committee and the board of directors, the choice of external auditor, the debt ratio and the fact of being listed in the United States. One segmentation of our sample shows that it is mainly transactions carried out directly with the main shareholders, directors and/or managers that have a negative influence on the value of the company.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Mehdi Nekhili & Moez Cherif, 2011. "Related parties transactions and firm's market value: the French case," Post-Print hal-02382027, HAL.
    • Handle: RePEc:hal:journl:hal-02382027
    DOI: 10.1108/14757701111155806
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    Cited by:

    1. Mohd Mohid Rahmat & Kamran Ahmed & Gerald J. Lobo, 2020. "Related Party Transactions, Value Relevance and Informativeness of Earnings: Evidence from Four Economies in East Asia," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-42, March.
    2. Ole-Kristian Hope & Haihao Lu & Sasan Saiy, 2019. "Director compensation and related party transactions," Review of Accounting Studies, Springer, vol. 24(4), pages 1392-1426, December.
    3. Martua Eliakim Tambunan & Hermanto Siregar & Adler Haymans Manurung & Dominicus Savio Priyarsono, 2017. "Related Party Transactions and Firm Value in the Business Groups in the Indonesia Stock Exchange," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 7(3), pages 1-1.
    4. Agnihotri, Arpita & Bhattacharya, Saurabh, 2019. "Internationalization, related party transactions, and firm ownership structure: Empirical evidence from an emerging market," Research in International Business and Finance, Elsevier, vol. 48(C), pages 340-352.
    5. Mehdi Nekhili & Héla Chakroun & Tawhid Chtioui, 2018. "Women’s Leadership and Firm Performance: Family Versus Nonfamily Firms," Journal of Business Ethics, Springer, vol. 153(2), pages 291-316, December.
    6. El-Helaly, Moataz & Al-Dah, Bilal, 2022. "Related party transactions and dividend payouts," Finance Research Letters, Elsevier, vol. 49(C).
    7. Dou, Huan & Liu, Yuanyuan & Shi, Yaru & Xu, Hanwen, 2022. "Are related-party transactions beneficial or detrimental in emerging markets? New evidence of financial services agreements from China," International Review of Financial Analysis, Elsevier, vol. 81(C).
    8. Maigoshi, Zaharaddeen Salisu & Latif, Rohaida Abdul & Kamardin, Hasnah, 2018. "Change in value-relevance of disclosed RPT across accounting regimes: Evidence from Malaysia," Research in International Business and Finance, Elsevier, vol. 44(C), pages 422-433.
    9. Abdul Rasheed P C & T. Mallikarjunappa & K.T. Thomachan, 2019. "Promoter Ownership, Related Party Transactions and Firm Performance: A Study Among Selected Companies in India," FIIB Business Review, , vol. 8(3), pages 205-217, September.

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