Abstract—This paper presents financial reporting issues
surrounding Related Party Transactions (RPTs). While RPTs
can be value-enhancing for companies, those that are used to
expropriate shareholders’ wealth may need to be shielded by
accounting irregularities. We discuss the theoretical link
between RPTs and accounting irregularities and review
evidence on accounting irregularities involving RPTs. We also
discuss issues with the existing evidence and suggest that future
research should work towards identifying: a) the background of
RPTs that served as expropriation mechanism, b) the types of
RPTs that normally involved accounting irregularities, and c)
the effect of accounting irregularities involving RPTs. The
results of studies with such approach may benefit the regulators
in curbing accounting irregularities, especially those that
involved RPTs.
Index Terms—Related party transaction, accounting
irregularities, Malaysia.
The authors are with Universiti Malaysia Terengganu, Kuala Terengganu,
Terengganu, 21030 Malaysia (e-mail: akmalia.ariff@umt.edu.my,
hafizaaishah@umt.edu.my).
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Cite: Akmalia M. Ariff and Hafiza A. Hashim, "Accounting Irregularities in Related Party Transactions," International Journal of Trade, Economics and Finance vol.5, no.2, pp. 180-183, 2014.