Abstract:
The last two decades have seen several large corporate entities internationally as well as in India, failing unsuspecting non-promoter stakeholders, taking them completely by surprise. On investigations, it was most often found that corporate governance had failed. In most cases, especially in India, expropriations were alleged through a network of related parties, going undetected because of poor corporate governance practices. This article studies whether transactions with related parties could impact firm values and firm continuity. The four cases of leading corporates studied here do reveal an inverse relationship between volume of related party transactions and firm value and firm continuity.
