M.A. Thesis:

The impact Relationship between Related Party Transaction with Return on Owner’s Equity and Return on Firms’ Equity

Related party transaction is a common feature of business activities. For example, some enterprises do a part of their activities through sub business units, joint venture and related units. Related party transaction may effect on business unit’s financial status, performance and flexibility. Relate party transaction is a possible sign of profit management for the users of financial statements. Therefore the auditing of these transactions is a difficult task due to its high risk potential. In this research we investigate the relationship between related party transactions and return on owner’s equity and return on firms’ equity. Related party transaction is dependent variable and the independent variables are return on owner’s equity and return on firms’ equity, the control variables include firm size and debt ratio. In order to data collection we analyzed the observation from 90 listed companies in Tehran Stock Exchange during 2009 to2013. This research is an applied and descriptive-correlative research and its methodology is causal comparative. The research hypotheses are as follows: There is a significant relationship between related party transactions and return on owner’s equity. There is a significant relationship between related party transactions and return on firms’ equity. The result shows that there is a significant relationship between related party transactions with return on owner’s equity and return on firms’ equity.

Keywords: Related party transactions, Return on owner’s equity, Return on firms’ equity