Do related party transactions promote or depress a firm’s investment in organization capital?

Ilhang Shin and Hansol Lee

Applied Economics, 2023, vol. 55, issue 31, 3661-3674

Abstract: We examine whether related party transactions influence a firm’s investment in organization capital, using a sample of Korean firms from 2001 to 2020. Given that the high magnitude of related party transactions increases a firm’s dependence on the captive market within related parties, we hypothesize that a firm’s incentives to invest in intangible capital are low when there are heavy related party transactions. We find the negative relationship between related party transactions and a firm’s investment in organization capital, consistent with the notion that related party transactions significantly impact the firm’s operations. We also find that such a relationship is more pronounced for firms in the high-tech industry and those that are financially weak.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00036846.2023.2174933 (text/html)
Access to full text is restricted to subscribers.

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:taf:applec:v:55:y:2023:i:31:p:3661-3674

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEC20

DOI: 10.1080/00036846.2023.2174933

Access Statistics for this article

Applied Economics is currently edited by Anita Phillips

More articles in Applied Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().