The impact of related party transactions on performance and valuation of Malaysian listed firms: testing the influence of corporate governance

This study examines the impact of related party (RP) transactions on the performance and valuation of Malaysian listed firms, and the influence that corporate governance has. The study sample was 187 companies listed in Malaysia from 2012 to 2014. Evidence is presented that tunnelling RP transactions have a significant negative association with firm valuation, consistent with the conflict of interest view that these transactions result in the extraction of private benefits from the firm. Propping RP transactions have a significant positive impact on firm valuation, giving credence to them being efficient transactions that can benefit firms operating in imperfect markets.