Abstract

Many of the most well-known corporate scandals were associated to related party transactions such as Enron, Wordcom or Parmalat. However, transactions between entities and related parties must be adequately disclosed in the financial statements of the reporting entity. Although IAS 24 is endorsed over two decades, a general observations in the literature is that these transactions are not properly disclosed in all instances (Mackenzie et al., 2014). IAS 1 demands to fully comply with all IFRS, which also relates to materiality. Related party transactions are very often prescribed by local requirements and listing standards e.g. Form 20-F of the SEC, which have to be disclosed in parallel to the IAS 24 disclosures. This empirical study will focus on the comparison between those IFRS Related Party Transactions (IRPT) and Non-IFRS related Party Transactions (NIRPT) for a sample of 100 companies listed on the NYSE. The research question is if based on empirical data it is possible to support the hypothesis that IRPRT are not properly disclosed as material NIRPT are missing for IFRS purpose. The results are mixed, as the majority of the companies in the sample provide a summary disclosure for IFRS and SEC-related related party disclosures within the notes, however there are also selective corporations, which strictly separate IFRS IAS 24 disclosures from SEC related party disclosures without any reverse effect.

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