Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/289292 
Year of Publication: 
2022
Citation: 
[Journal:] Cogent Business & Management [ISSN:] 2331-1975 [Volume:] 9 [Issue:] 1 [Article No.:] 2135208 [Year:] 2022 [Pages:] 1-23
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
In its business operation, a firm may transact with related parties. From an agency theory point of view, agents may use the transaction to maximize the firm value or for personal gain. This study aims to analyze the effect of Related Party Transactions on Firm Value with Good Corporate Governance as moderating variable, represented by the oversight by the majority shareholder and the size of the audit committee. The majority shareholders are divided into three groups: the state-owned company, the foreign-owned company, and the local privately owned company. The study was done using a quantitative analysis method on 58 public companies on Indonesia Stock Exchange included in the LQ45 Stock Index between 2016-2020. The data is processed with the moderated multiple regression model. The result shows no significant relationship exists between Related Party Transactions on Firm Value. The Detrimental Related Party Transactions only become significant on Firm Value when moderated by the state majority ownership. Meanwhile, the Beneficial Related Party Transactions only become significant on Firm Value when moderated by the foreign majority ownership. This study recommends that state-owned companies strengthen the application of their good corporate governance and execute related party transactions only when it adds to the firm value. Managers of foreign companies are advised not to rely entirely on related party transactions with shareholders or sister companies.
Subjects: 
agency theory
firm value
good corporate governance
related party transactions
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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