IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 4 NO. 3 2019

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Effects of Related Party Transaction on Financial Performance of Companies, Evidenced by Study of Listed Companies in Nigeria.

Osakuni Chidimma Anastasia and Dr. Joshua Onuora

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Abstract

This research examined the relation between related party transactions (RPTs) and financial performance of listed conglomerates in Nigeria. Our research specifically sought to determine whether related party transactions has an effect on return on equity (ROE) and net worth (NW) of conglomerates listed on the floors of Nigeria Stock Exchange for a period of 8 years (2008- 2015). The data required to calculate the various performance indicators as well as the data on related party transactions were obtained from the audited annual accounts of the companies. The Pearson correlation method was used to examine the correlation between the dependent and the independent variable while the simple regression analysis was used in analyzing the data. The data analysis suggests that related party transactions, does not significantly influence return on equity with the exception of net worth(NW) which proved to be significantly influenced by related party transactions. Our correlation result revealed that most related party transactions correlate positively with the net worth of the companies.

keywords:

Related party transactions (RPTs). Financial performance, Return on equity(ROE), Net worth (NW),

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