Relation to financial distress through transactions with affiliated entities

  • Ali Najafi Moghadam
  • Mahvash Farrokhi
Keywords: financial distress, auditor's size, transactions with affiliated persons


The purpose of this study was to investigate the relationship between financial distress and transactions with affiliated individuals. In this research financial information of 152 companies accepted in Tehran Stock Exchange during the period of 1391 to 1396 has been investigated. The purpose of this study is applied. In terms of collecting and analyzing data, this research is a descriptive correlation method. From the point of view of information gathering, post-event research is used to analyze the data using descriptive, inferential statistics and multi-variable regression analysis. .

This research has been investigated with two hypotheses by ERW software. In this regard, in the initial implementation of the first model, using the printing statistics and Yasmin, the appropriate regression model model (computational or stationary data with random effects) has been determined and using statistics such as ; The novelty of this and Chou's reliability of variables are investigated. Then, in the second run, the classic regression assumptions model, including the normal distribution of variables, the independence of the distribution of errors, the normal distribution of errors, the heterogeneity of variances and the linear relationship between independent and control variables, have been investigated. Finally, the results of the research show that financial distress through transactions with affiliated persons But the size of the auditor is not relevant to transactions with affiliated persons.


Download data is not yet available.

Author Biographies

Ali Najafi Moghadam

Assistant professor of Islamic Azad university Tehran, Iran.

Mahvash Farrokhi


Iravani, Mohammad Jawad (2009), Global Financial Crisis and Several Strategic Recommendations, Journal of Commercial Management, Volume 1, Issue 2, Page 33 to 46.

Hassanzadeh, Mohammad Rezaei Zanbbar, Zeynab (1393). Investigating the effect of deterioration of corporate governance mechanism on financial distress among companies accepted in Tehran Stock Exchange. Master's Thesis, Accounting, Freelancer.

Khojavi, Shokraleh; Ghadirian Arani, Mohammad Hussein (1397). Managers ability, financial performance and risk of bankruptcy. Journal of Accounting Knowledge, Faculty of Management and Economics, Shahid Bahonar University of Kerman, 9th, 1st.

Praise, Mohammad Hussein, Mansouri, Sholeh (1396). A comparative study of corporate governance mechanisms in helpless and non-financial firms, financial research.

Sajjadi, Seyed Hossein, Banabi Ghadim, Rahim (1395), The Impact of Value Added on the Financial Distress of Companies Acquired in Tehran Stock Exchange. Audit Knowledge, the fifteenth year.

Nader Ali, Hadi (1393). The relationship of transactions with affiliated persons (goods and financial resources) with the performance of companies. Master's Thesis for Accounting. Institute of Higher Education of Qazvin, Faculty of Higher Education.

Carpenter, Mohammad Reza; Barzegar, Power of Allah (1394). The study of the relationship between political communication with the policy of dividing profits and transactions with affiliated entities in companies admitted to the Tehran Stock Exchange. Second National Conference and 2nd International Conference on Management and Accounting of Iran. Mazandaran, International Conference Center.

Nevrouz, Iraj, Saeedi, Mohammad, 2009, A Survey of Profit Earnings Profit for Net Profit for the Evaluation of Company Performance, Accounting and Auditing Reviews, No. 39, p. 121-97

Andrade, G., Kaplan, S. (2011). How Costly is Financial (Not Economic) Distress? Evidence from Highly Leveraged Transactions that Became Distressed. Journal

Altman, E. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. Journal of Finance, 22(4), 589-609.

Arunachala, V. and Back, G., 2012 , Functional fixation revisited: the effects of feed back and a repeated measures desigh on information processing changes in reponsd to an accenting change, Accounting

Altman, E. (1968). Financial Ratios, Discriminant Analysis and the Prediction of Corporate Bankruptcy. Journal of Finance, 22(4), 589-609.

Bhuiyan, Borhan Uddin,. Roudaki, Jamal (2018). "Related party transactions and finance company failure: New Zealand evidence", Pacific Accounting Review,

Chen, C. J. P., Y. Ding, and C. Kim. (2011). Political connection, legal enforcement and analysts' forecast characteristics. Working paper, City University of Hong Kong.

Demerjan., Wong, T., (2006). “Propping through Related Party Transactions.” sactions. Working Paper, National Yunlin University of Science and Technology Jian Review of Accounting Studies15: 70-105.

Giang, G., Lee, C. M. C., & Yue, H. (2010). Tunneling through intercorporate loans: The China experience. Journal of Financial Economics, 98, 1–20.

Gyamfi, M.N., Bokpin, G.A., Gemegah, A. (2015). Corporate governance and transparency: evidence from stock return synchronicity. Journal of Financial Economic Policy, Vol. 7 Iss 2 pp. 1-26.

Habibib,. HARIS, .2017, Political Connections and Related Party Transactions Evidence fromIndonesia:, The International Journal of Accounting, Vol.2, No.1, pp 77-87.

Kholbeck M. J, Mayhew B.W. (2014). Related Party Transactions., Working paper Series. Social Science Research

Mazouz, A., Crane, K., Gambrel, P. A. (2015). The Impact of Cash Flow on Business Faillure Analysis And Prediction.

How to Cite
Moghadam, A. N., & Mahvash Farrokhi. (2019). Relation to financial distress through transactions with affiliated entities. EPH - International Journal of Business & Management Science (ISSN: 2208-2190), 5(4), 01-18. Retrieved from