The Effect of Related Party Transactions through Opportunistic Behaviour Management to Increase Firm Value

Abstract

Objective – This research aims to determine and analyze related party transactions to increase firm value through opportunistic behaviour management by conducting earnings management on manufacturing companies listed on the Indonesian Stock Exchange between 2015 and 2018. Methodology/Technique – There are 34 companies that fulfill the requirements to become the sample of this study. The method applied in analyzing the data is verification using path analysis. Findings – The results of the research show that related party transactions do not have any significant effect on firm value however it indicates a positive impact. Moreover, related party transactions do not have any significant impact on earning management yet it gives a negative impact on earning management. Novelty – The influence of earnings management shows a positive impact on firm value while it shows no signs of positive impact on firm value. The analysis shows that the value of the indirect impact of related party transactions through earnings management towards firm value is negative being 0.022 smaller than the direct impact of related party transaction toward firm value which is 0.053. This indicates that related party transactions through earnings management have no significant impact on firm value. Type of Paper: Empirical. Keywords: Related Party Transactions; Earnings Management; Firm Value. Reference to this paper should be made as follows: Suryani, A., Atikah; Putri, H. T. 2019. The Effect of Related Party Transactions through Opportunistic Behaviour Management to Increase Firm Value, J. Fin. Bank. Review 4 (2): 64 – 72 https://doi.org/10.35609/jfbr.2019.4.2(3) JEL Classification: G02, G30, G32, G39.