Corporate Governance, Related Party Transactions and Firm Performance: A Panel Data Analysis

Mr. Sanjeev Dhar; Mr. Raj K Kovid; Mr. Mridul Dharwal

doi:https://doi.org/10.17492/mudra.v5i2.14326

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Corporate Governance, Related Party Transactions and Firm Performance: A Panel Data Analysis

Sanjeev Dhar, Raj K Kovid, Mridul Dharwal

https://doi.org/10.17492/mudra.v5i2.14326

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Published Online: November 25, 2018

Author Details ( * ) denotes Corresponding author

1. Sanjeev Dhar, Research scholar, NIIT University, Neemrana, Rajasthan, India (dhar.sanjeev@gmail.com)

2. * Raj K Kovid, Professor, School of Business Studies, Sharda University, Greater Noida, Uttar Pradesh, India (kovidrk@gmail.com)

3. Mridul Dharwal, Associate Professor, School of Business Studies, Sharda University, Greater Noida, Uttar Pradesh, India (mridul.dharwal@sharda.ac.in)

Research on examining the relationship between the extent of related party transactions (RPTs) and the firm performance lack consensus. To further investigate this relationship, we use data of a sample of 483 Indian companies listed at National Stock Exchange (NSE) for the period 2013-2017. Based on analysis of data using panel regression, we observe that different forms of RPTs - income, expenses, borrowings and Loans, bank guarantee - do not lead to enhancement of the firm performance. However, the income from related parties are found to be negatively associated with firm performance. This is consistent with the hypothesis of principal-principal or manager conflict in corporate governance.

Keywords

Corporate governance; Related party transactions; India; Panel regression

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