Abstract
This study examines the relationship between related party transactions, audit committee characteristics and real earnings management, using data from an emerging market, namely Malaysia.This study also examines the moderating impact of family firm on the association between related party transactions and earnings management.Using a sample of 216 Bursa Malaysia listed companies for the year 2009, the study shows that related party transactions exacerbate real earnings management and provides weak evidence that audit committee financial expertise mitigates real earnings management.In addition, the study also indicates that family-controlled firms constrain the opportunistic effect of related party transactions on real earnings management, thus supporting the alignment effect of family ownership.
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