Research Article Open Access

The Effect of the International Accounting Standards on the Related Party Transactions Disclosure

Stauropoulos Antonios1, Samaras Ioannis1 and Arsenos Panagiotis2
  • 1 Department of Applied Informatics, University of Macedonia, 156 Egnatia Str, P.O Box 1591 540 06, Thessaloniki, Greece
  • 2 Department of Business Administration, TEI of Ionian Islands, Iceland


Problem statement: Several recent North American corporate scandals have brought attention to the potential for accounting manipulations associated with Related Party Transactions (RPTs), which have lead to a decline in perceived earnings quality. We examine the value relevance of disclosed RPTs in Greek corporations. Approach: We focus on two types of RPTs: sales of goods and sales of assets, using a value relevance approach. Results: From 2002-2007, we find that the reported earnings of firms selling goods or assets to related parties exhibit a lower valuation coefficient than those of firms in Greece without such transactions. This result is not observed during 2005-2007 after a new fair value measurement rule for RPTs came into effect. Conclusion: Our evidence suggests that the new RPT regulation in Greece is perceived to be effective at reducing the potential misuse of RPTs for earnings management purposes. Since RPTs have been the subject of numerous scandals in North America, our evidence from the Greek stock markets suggests that new RPT accounting standards could prove an efficient solution to this issue.

American Journal of Applied Sciences
Volume 8 No. 2, 2011, 156-163


Submitted On: 2 October 2010 Published On: 28 February 2011

How to Cite: Antonios, S., Ioannis, S. & Panagiotis, A. (2011). The Effect of the International Accounting Standards on the Related Party Transactions Disclosure. American Journal of Applied Sciences, 8(2), 156-163.

  • 4 Citations



  • International Financial Reporting Standards (IFRS)
  • value relevance
  • Related Party Transactions (RPTs)
  • hypotheses development
  • GAAP
  • International Accounting Standards Board (IASB)
  • earnings management
  • Return-On-Assets (ROA)
  • Earnings Per Share (EPS)