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Earnings Management: A Case of Related Party Transactions

Year 2016, Volume: 6 Issue: 7, 51 - 55, 01.10.2016

Abstract

This study was conducted on the related party transaction and earnings management. Agency theory provides that managers may engage into self-enrichment transactions to maximize their benefits at the detriment of the shareholders of the firm. Though, management or concentrated ownership was suggested as the possible solution to this problem, this form of ownership structure has its peculiar problems which are termed as type II agency problem. Controlling shareholders are found to be using their voting power to extract extra benefits from the firm through the insider information and in many instances engage in detrimental related party transactions at the expense of minority shareholders. This study have identified how and why controlling shareholders or managers use related party transaction as a means to perpetrate accrual-based or real activity earnings management. It was recommended that empirical study be conducted to investigate whether disclosure regulation can constrain the controlling shareholders or management against the use of real-activity management through related party transaction.

Year 2016, Volume: 6 Issue: 7, 51 - 55, 01.10.2016

Abstract

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Details

Other ID JA58KF44JN
Journal Section Research Article
Authors

Zaharaddeen Salisu Maigoshi This is me

Rohaida Abdul Latif This is me

Hasnah Kamardin This is me

Publication Date October 1, 2016
Published in Issue Year 2016 Volume: 6 Issue: 7

Cite

APA Maigoshi, Z. S., Latif, R. A., & Kamardin, H. (2016). Earnings Management: A Case of Related Party Transactions. International Journal of Economics and Financial Issues, 6(7), 51-55.
AMA Maigoshi ZS, Latif RA, Kamardin H. Earnings Management: A Case of Related Party Transactions. IJEFI. October 2016;6(7):51-55.
Chicago Maigoshi, Zaharaddeen Salisu, Rohaida Abdul Latif, and Hasnah Kamardin. “Earnings Management: A Case of Related Party Transactions”. International Journal of Economics and Financial Issues 6, no. 7 (October 2016): 51-55.
EndNote Maigoshi ZS, Latif RA, Kamardin H (October 1, 2016) Earnings Management: A Case of Related Party Transactions. International Journal of Economics and Financial Issues 6 7 51–55.
IEEE Z. S. Maigoshi, R. A. Latif, and H. Kamardin, “Earnings Management: A Case of Related Party Transactions”, IJEFI, vol. 6, no. 7, pp. 51–55, 2016.
ISNAD Maigoshi, Zaharaddeen Salisu et al. “Earnings Management: A Case of Related Party Transactions”. International Journal of Economics and Financial Issues 6/7 (October 2016), 51-55.
JAMA Maigoshi ZS, Latif RA, Kamardin H. Earnings Management: A Case of Related Party Transactions. IJEFI. 2016;6:51–55.
MLA Maigoshi, Zaharaddeen Salisu et al. “Earnings Management: A Case of Related Party Transactions”. International Journal of Economics and Financial Issues, vol. 6, no. 7, 2016, pp. 51-55.
Vancouver Maigoshi ZS, Latif RA, Kamardin H. Earnings Management: A Case of Related Party Transactions. IJEFI. 2016;6(7):51-5.