A Review of the Relationship between Corporate Financial Performance and the Level of Related Party Transactions among Listed Companies on Tehran Stock Exchange

Ali Basalighe and Ehsan Khansalar

International Journal of Economics and Finance, 2016, vol. 8, issue 7, 330

Abstract: The main objective of the investors to invest in stocks is to earn a profit and this is achieved by firm performance improvement. So the investors analyze various kinds of financial performance data for the different kinds of business models to determine whether some models perform better than others.The present study aims to collect the evidences of the relationship between firm economic performance and the level of related party transactions on Tehran Stock Exchange. So far, empirical evidences are not provided to reveal a clear picture of the reasons behind the related party transactions in Iran. In the case of opportunistic behavior in transactions, it is expected that the level of related party transactions has a relationship with economic performance variables. The research data have been collected over 1387-1393 for companies listed on Tehran Stock Exchange and to test the hypotheses, multivariate regression analysis of panel data is used. The results indicate that at a 95% confidence level, the economic value added (EVA), refined economic value added (Reva) and the market value added (MVA) variables have a significant relationship with the level of related party transactions.

Date: 2016
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