Abstract

This study investigates whether related party transactions(hereafter RPTs) are associated with trading volume. This study establishes null hypothesis that RPTs are not related to trading volume based on prior studies regarding RPTs. We measure trading volume as proxy of investors’ heterogeneous beliefs. After controlling for variables related with trading volume as reported in previous studies, the regression coefficient for the RPTs shows statistically significant positive sign. These results indicate that the RPTs are positively associated with investors’ heterogeneous beliefs. This study contributes to extant literature on RPTs by providing evidence that RPTs affect investors’ trading decisions. Also the results may help policy makers in their policy development.

Keywords

• Related Party Transactions(RPTs)
• Trading Volume
• Investors’ Heterogeneous Beliefs

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