The impact of product market competition on transactions with related parties and company performance

• Main Authors: Mojtaba Asadi, Norouz Norouzzadeh, Mohsen Hamidian
• Format: Article
• Language: English
• Published: Growing Science 2015-03-01
• Series: Management Science Letters
• Subjects: Tehran Stock Exchange; Product market competition; Competition; Herfindahl-Hirschman Index
• Online Access: http://www.growingscience.com/msl/msl_2015_10.pdf

This paper presents an empirical investigation on the effect of product market competition on transactions with related parties and company performance. The study selects a sample of 250 randomly selected firms whose common shares were traded on Tehran Stock Exchange. The study uses Herfindahl-Hirschman Index (HHI) to measure the market concentration and uses historical information over the period 2008-2012 to examine the hypotheses of the survey. Using simple regression analysis, the study has detected a positive relationship between HHI and related party transactions. In addition, the study has detected a negative relationship between competition and company performance measured by return on assets.