Do business group firms use related party transactions efficiently? An empirical study

Nitya Nand Tripathi, Asha Binu Raj and P. Bhanu Sireesha

Macroeconomics and Finance in Emerging Market Economies, 2025, vol. 18, issue 1, 24-46

Abstract: We examine the nature of related party transactions between business group and stand-alone companies and its impact on the firm performance. The magnitude of related party transactions varies across the Indian firms, however, prior approval is required from audit committee. Hence, we examine the empirical relationship between related party transactions, firm performance, and corporate governance for the period 2003–2016. We find that some related party transactions turn as efficient transactions. Some transactions arise as opportunistic transactions which are not supported by any of the corporate governance proxies. We suggest that the audit committees and independent directors scrutinize those transactions appropriately.

Date: 2025
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DOI: 10.1080/17520843.2022.2033442

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