Board diversity and related party transactions

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

Finance Research Letters, 2025, vol. 77, issue C

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.

Keywords: Board diversity; Related party transactions (search for similar items in EconPapers)
JEL-codes: G35 M41 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325003101

DOI: 10.1016/j.frl.2025.107046

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