Same Auditor Auditing Both Sides of Related Party Transactions and Analyst Earnings Forecasts

• Main Author: 林欣穎
• Other Authors: 周玲臺
• Format: Others
• Language: zh-TW
• Online Access: http://ndltd.ncl.edu.tw/handle/88202656877264978340

碩士 === 國立政治大學 === 會計研究所 === 102 === Related party transactions are prevalent and quite important to public firms in Taiwan. Prior studies find that related party transactions impair firms’ information quality. Literature also documents that analysts play a crucial role as an information intermediary between firms and investors, and they use accounting statements as one information source to make forecasts. The purpose of this research is to examine the effects of firms’ related party transactions on two analyst forecast characteristics, i.e., earnings forecast accuracy and dispersion. We also examine if those effects can be alleviated by same auditors auditing both sides of related party transactions. Our results show that related party transactions have negative effects on analyst earnings forecasts. We find that the amounts of related party transactions are negatively related with forecast accuracy and positively related with forecast dispersion. We also find that those negative effects are mitigated if both sides of related party transactions are audited by the same auditor. While related party transactions are not unusual in Taiwan, our results can provide insights for firms, investors and regulators.