Related Party Transactions, Parent Company Statements, and International Financial Reporting Standards

Abstract

This paper examines the research of related party transactions should adopt parent company statements or consolidated statements, and also investigates whether related party transactions in the pre-IFRS period (2010-2012) differs from the post-IFRS period (2013-2015). The sample, consisting of Taiwan listed companies, contains parent company statements and consolidated statements covering the period from 2010 to 2015. The results suggest that the related party transactions of parent company statements are significantly larger than those of consolidated statements, and the results also indicate no significant difference between the related party transactions before and after IFRS adoption. The inferences are robust to different sample specifications, to different statistical tests, and to different measures of variables. Taiwan offers a unique setting for the study of related party transactions and parent company statements. This paper provides theory and evidence suggesting that the research of related party transactions should adopt parent company statements which can see a more comprehensive disclosure. The pioneering argument of this paper makes a significant contribution to Taiwan and accounting literature.