Relationship of Related Party Transactions and Earnings Management

Nur Astri Sari, Rusma Nailiah, Achmad Suhaili, Fitria Handayani


This study aimed to examine the relationship between related party transactions and earnings management. The sample of this study was companies listed on the Indonesia Stock Exchange for the 2017 and 2018 period. The result shows that related party transaction (sales and expense) has a negative effect on accrual earnings management. It indicates that firms use related party transactions (sales and expense) as substitutes for earnings management especially accrual earnings management.

Full Text:



Ayres, F.L. 1994. Perception of Earnings Quality: What Manager Need to Know? Management Accounting, 27-

Chen, J. J., Cheng, P. & Xiao, X. (2011). Related party transactions as a source of earnings management.

Applied Financial Economics, 21, 165–181.

Djankov, S., La Porta, R., Lopez-De-Silanes, F. & Shleifer, A. (2008). The law and economics of self-dealing.

Journal of Financial Economics, 88, 430–465.

El-Helaly, M., Georgiou, I., Lowe, A. D. 2018. The interplay between related party transactions and earnings

management: The role of audit quality. Journal of International Accounting, Auditing, and Taxation,

, 47-60.

Ikatan Akuntan Indonesia. 2017. Standar Akuntansi Keuangan per 1 Januari 2017. Jakarta: Salemba Empat.

Jara, M., dan Lopez, Felix J. 2008. Earnings management and internal control mechanism: Evidence from

Chilean firms.

Kasznik, Ron. 1999. On the association between voluntary disclosure and earnings management. Journal of

Accounting Research, 37(1), 57-81.

Kohlbeck, M., dan Mayhew, B.W. 2017. Are related party transactions red flags? Contemporary Accounting

Research, 34, 900-928.

Michaelson, S.E., James, J.W., & Charles,W. 1995. A market based analysis of income smoothing. Journal of

Business Finance and Accounting, 8(4), 1179-1195.

Peraturan OJK Nomor IX.E.1 tentang Transaksi Afiliasi dan Benturan Kepentingan Transaksi Tertentu.

Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of Accounting

and Economics, 42, 335–370.

Ryngaert, M. & Thomas, S. (2012). Not all related party transactions (RPTs) are thesame: Ex ante versus ex

post RPTs. Journal of Accounting Research, 50, 845–882.

Schroeder, R. G., Clark, M.W., dan Cathey, J. M. 2009. Financial Accounting Theory and Analysis (9th ed.).

United States of America: John Wiley & Sons, Inc.

Scott, William R, 2009. Financial Accounting Theory. Fifth Edition. Canada Prentice Hall.

Siregar, Sylvia Veronica N.P. & Bachtiar, Yanivi. 2005. Corporate governance, information asymmetry, and

earnings management. Jurnal Akuntansi dan Keuangan Indonesia, 2(1), 77-106.

Villalonga, B., dan Amit, R.. 2006. How do family ownership, control, and management affect firm value?.

Journal of Financial Economics.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.