Negative Entrenchment Effect of Business Group Conglomerates on Selling and Purchasing Related Party Transactions

• Main Authors: Dayinta Ayuningtyas, Vera Diyanty
• Format: Article
• Language: English
• Published: Pusat Penelitian dan Pengabdian Masyarakat Sekolah Tinggi Ilmu Ekonomi (PPPM STIE) 2017-03-01
• Series: Journal of Economics, Business & Accountancy
• Subjects: business group conglomerates, negative entrenchment effect, selling and purchasing related party transaction, ultimate owner.
• Online Access: https://journal.perbanas.ac.id/index.php/jebav/article/view/480

This study aims to explain the negative entrenchment effect arised from selling and purchasing related party transactions on business group conglomerates. This study is using 322 firm-year data of firms listed at Indonesia Stock Exchange in 2012-2013 period.This research provides evidence that the ownership by business conglomerates strengthened the negative entrenchment effect in both total of selling-purchasing related party transactions and selling-purchasing related party transactions which come from operating activities. Thus, from the result, it can be presumed that there might be a possibility of agency conflict arised from selling-purchasing related party transactions when a firm is part of business conglomerates.