Ownership concentration and board features as determinants of related party transactions - evidence from GCC countries

Abstract

This study examines the impact of ownership concentration, board features and external audit on related party transactions (RPTs) of listed firms in four Gulf Cooperation Council (GCC) countries, namely Bahrain, KSA, Kuwait and UAE. A sample of 460 firm-year observations was investigated during 2016-2018. Six models of hierarchical multiple regression (HMR) were performed to regress five independent variables (ownership concentration, board size, role duality, board independence, audit quality) on RPTs which include three transactions (key management compensation, due from RP and due to RP). HMR results indicate that ownership concentration, board size and board independence are associated with only one type of RPTs, which is key management compensation by listed firms in GCC countries. However, other types of RPTs are not explained by most of independent variables. Providing practical evidence on listed firms in GCC may provide a new dimension on this part of empirical accounting research and may help in improving governance practices. This research is the first attempt in the Gulf region to investigate the impact of CG mechanisms on RPTs. It makes a unique contribution and enrichment to this area of the accounting research in emerging markets in general and in GCC countries in particular.