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集團企業營業活動外關係人交易對盈餘持續性之影響：委託同一會計師事務所查核財務報表之效果
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The Impact of Non-Operating Related Party Transactions by
Affiliated Business Groups on Earnings Persistence: The Effect of
Audits from the Same CPA Firm
1. Purpose
In pursuit of the overall effect, related party transactions are a common method used
by components of affiliated business groups (Chang and Hong, 2000; Khanna and Palepu,
2000). The main reason is that the related party transactions are commonly seen in the
affiliated business group as a high level of familiarity and trust among the components,
which can lower the transaction costs that result from information asymmetry
(Williamson, 1975). Therefore, related party transactions are an important factor in raising
corporate operating efficiency. However, affiliated business groups are extended from
family members, interlocking shareholders, sit on the boards of other groups, or
supervisors are common among the components. If groups controlling shareholders intend
to misappropriate or embezzle corporate funds, then related party transactions could be a
likely tool for the group.
The group’s auditor is unable to ask the affiliated business group to reduce related
party transactions to avoid an audit risk. It is essential for auditors of the group to ensure
and raise the audit quality while not negatively affecting or interfering with normal
operations of related party transactions. This study examines whether, by hiring the same
auditing firm, auditors of the affiliated business group have a better understanding of the
content and characteristics of the related party transactions, i.e., whether they are able to
determine the rationality of such transactions and then further lower and inhibit use of
improper related party transactions to manipulate financial reporting.
Most of extant literature regarding the relationship between related party transactions
and earnings management has taken a viewpoint on the controlling shareholders of the
affiliated business groups conduct the related party transactions for personal gain. It was
found that the more related party transactions taken place among the business groups, the
more earnings management was conducted. However, related party transactions can be
conducted to improve the efficiency of transactions among the components of the group
and do not need to have the purpose of earnings manipulation. Also, the auditors of the
Chun-Ju Fang
, Associate Professor, Department of Accounting, National Changhua University of
Education
Ruey-Dang Chang
, Professor, Department of Accounting, National Chung Hsing University