Related Party Transactions and Corporate Governance Mechanisms: Evidence from Firms Listed on the Karachi Stock Exchange

Pakistan Business Review, Vol. 17, No. 3, pp. 663-680, 2015

18 Pages Posted: 26 Nov 2015

See all articles by Hamid Ullah

Hamid Ullah

Abdul Wali Khan University

Attaullah Shah

Institute of Management Sciences

Date Written: 2015

Abstract

This study has investigated the impact of corporate governance mechanisms on related party transactions of Pakistani firms. A sample of 160 non-financial firms are used for the analysis that has reported related party transactions in their annual reports for the sample period 2006 to 2012. The empirical results of different regression models suggested that board independence, blockholdings and institutional ownership play a vital role in the internal governance mechanism. While associated firm ownership, CEO-duality and managerial ownership act as agents that expropriate minor shareholders wealth through related party transactions. Moreover, banking loan, multiple banks in relation and audit quality act as external governance agents and can mitigate the conflict of interest between the minor and major shareholders. These agents may lessen the expropriation through related party transactions by major shareholders, there by securing the interest of minor shareholders.

Suggested Citation

Ullah, Hamid and Shah, Attaullah, Related Party Transactions and Corporate Governance Mechanisms: Evidence from Firms Listed on the Karachi Stock Exchange (2015). Pakistan Business Review, Vol. 17, No. 3, pp. 663-680, 2015, Available at SSRN: https://ssrn.com/abstract=2695278

Hamid Ullah

Abdul Wali Khan University ( email )

Mardan, Pakhtunkhwa 23200
Pakistan

Attaullah Shah (Contact Author)

Institute of Management Sciences ( email )

1-A, Sector E / 5, Phase – VII, Hayatabad, Peshawa
Peshawar, NWFP 25000
Pakistan
+923459146115 (Phone)

HOME PAGE: http://www.opendoors.pk

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
179
Abstract Views
950
rank
203,462
PlumX Metrics