An Analysis of Corporate Governance Issues Arising Out of Related-Party Transactions: With Special Reference to NSE 200 Companies

Abstract

A transaction between a company and its related parties such as subsidiary companies, associate firms, key management personals and their relatives etc. is termed as Related Party Transaction (RPT). In the business world, related party transactions are quite common and it is a part of every business. It was identified that, behind many corporate frauds, there was a strong role of related party transactions. Now a day, it is an important question among researchers as well as regulatory bodies to identify the way of misusing related party transactions. This study analyses Indian listed companies, which is charted in NSE 200 Index and found that RPT is relatively predominant among all companies. At the end of this paper, it examined the relationship among related party transactions and performance of the companies as well as influences of ownership structure. It concluded as there is no significant impact on performance, whereas, proprietor’s ownership was highly connected with level of related party transactions.