Impact of Outside Blockholders Over Link between Independent Directors and the Normal and Abnormal Related Party Transactions

Challoner Matero and Hsien-Li Lee
Additional contact information
Hsien-Li Lee: Department of Accounting, Chung Yuan Christian University, College of Business, Republic of China

International Journal of Research and Scientific Innovation, 2024, vol. 11, issue 4, 687-704

Abstract: This study examines the effect of independent directors on related sales and related purchases using the normal and abnormal values from 2003 to 2022 of the total sample of 13,789 firms representing 89% of the total Taiwanese listed firms. As a second tier of independent external mechanisms, impact of outside blockholders, on the association between independent directors and related party transactions is examined. This study hypothesizes that the level of related party transactions varies with independent directors. Further, the connection between related party transactions and independent directors varies with the impact of outside blockholders. This study finds that a greater number of independent directors is significantly linked with lesser levels of normal related sales, lower levels of normal related purchases, and higher levels of abnormal related purchases. Thus, the hypotheses are confirmed. This study also finds that the extent of impact of outside blockholders supports a lower level of normal related purchases but higher abnormal related purchases, thus, the hypotheses are supported. Implications include that firms should strengthen their monitoring mechanisms to oversee both normal and abnormal related transactions, emphasizing the importance of regular board reviews. Additionally, the influence of outside blockholders on purchasing decisions underscores the need for companies to engage with these stakeholders to align strategies with shareholder interests.

Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.rsisinternational.org/journals/ijrsi/d ... -issue-4/687-704.pdf (application/pdf)
https://rsisinternational.org/journals/ijrsi/artic ... -party-transactions/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bjc:journl:v:11:y:2024:i:4:p:687-704

Access Statistics for this article

International Journal of Research and Scientific Innovation is currently edited by Dr. Renu Malsaria

More articles in International Journal of Research and Scientific Innovation from International Journal of Research and Scientific Innovation (IJRSI)
Bibliographic data for series maintained by Dr. Renu Malsaria ().