The Underlying Mechanism of Related Party Transactions Disclosure Across Countries

Abstract

This paper investigates the interrelationships between several external social institutions and related party transactions disclosure across 49 countries. A theoretical framework is proposed to encompass the interrelationships between cultural values, legal environment, government intervention in the economy, political environment, and related party transactions disclosure. Empirical results using path analysis showed that there are significant indirect effects of cultural values and gross national production per capita on related party transactions disclosure, whereby the legal environment and government intervention in the economy play intervention roles in this context. This investigation represents contribution towards the development of a comprehensive framework for related party transactions disclosure practices across countries.

Keywords: Related Party Transactions Disclosure, Social Institutions, Cultural Values, Legal Environment, Government Intervention, Political Environment

JEL Classification: M40, M41