Related party transactions and dividend payouts

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Accounting Department

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Moataz El-Helaly, Bilal Al-Dah

Document Type

Research Article

Publication Title

Finance Research Letters

Publication Date

Fall 10-1-2022




This paper examines the association between Related Party Transactions (RPTs) and dividend payouts. Using a sample drawn from the S&P 1,500 firms and hand collected RPTs data between 2011 and 2018, we find that the magnitude of RPTs, measured by the number of transactions, is positively associated with the dividend yield. Additionally, we find that this relationship is mainly driven by RPTs that are classified as less opportunistic by prior studies. Our findings suggest that, when the magnitude of RPTs increases, firms tend to increase dividends to mitigate agency conflicts as agency problems become more prevalent.

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