International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

Examining the impact of Board of Directors Characteristics on Transactions with Related Parties: Goods and Financial Resources

Document Type : Original Article

Authors
Behrang Parsafard 1
Sohrab Osta 2
sanaz golnazari 3
1 Doctoral of accounting, Faculty of Management and Accounting, Allameh Tabataba'i University
2 Assistant Professor, Accounting, Ilam University, Ilam, Iran
3 Master of Accounting, Accounting, Ilam University, Ilam, Iran.
10.22034/ijfma.2025.78259.2227
Abstract
Purpose: One of the core assumptions underlying the Agency Theory (AT) is that managers consume the company’s resources for their benefit to maximize their own interests. In this context, related-party transactions (RPTs), often favorable to managers and detrimental to shareholders, are among the striking examples. Against this background, the present study was to investigate the effects of board of directors’ (BD) characteristics on transactions of goods and financial resources with related parties (RPs).
Methods: In total, 125 companies listed on the Tehran Stock Exchange (TSE), Iran, for the period of 2018-2023 (viz., 750 company-year observations), were selected by the systematic sampling technique, and then examined. Two indicators, i.e., transactions of goods and financial resources, were accordingly chosen to evaluate RPTs as the dependent variable. Moreover, BD characteristics were measured through chief executive officer (CEO) dual responsibility, BD size, BD independence, and CEO tenure.
Findings: The study results revealed a significant relationship between CEO dual responsibility, BD size, BD independence, and CEO tenure and RPTs (namely, transactions of goods and financial resources) with a 95% confidence interval (CI).
Conclusion: A direct relationship was ultimately established between CEO dual responsibility and BD size, confirming the notion of transaction efficiency, but there was an inverse relationship between BD independence and CEO tenure, verifying the view of a conflict of interest.
Keywords
Related-Party Transaction CEO, Board of Directors, Dual Responsibility, Independence, Tenure
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