Related party transactions on tunnelling and propping perspective

Hety Budiyanti, Eduardus Tandelilin, Suad Husnan and Mamduh Hanafi

International Journal of Business and Globalisation, 2020, vol. 25, issue 1, 46-72

Abstract: This research investigates the relationship between related party transactions (RPTs) and shareholders value. Using a sample of Indonesian listed firms from 2009 to 2015, we find that considerable shareholder value was destroyed when the RPT is considered as tunnelling activity, while on the other hand firms earn positive significant return when it is considered as propping activity. Our findings also suggest that firms with concentrated ownership structure experience larger value loss. Our further investigations also indicate the abnormal returns are positively related to proxies of corporate governance and information disclosure.

Keywords: related party transaction; tunnelling; propping; market reaction; good corporate governance. (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbglo:v:25:y:2020:i:1:p:46-72

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