出版品
Representative Directors Appointed by the Juridical Entities and Sales-based Related Party Transactions—Empirical Findings from Taiwan(法人代表董事與關係人銷貨交易之關係--台灣的實證)
CHING-LUNG CHEN, Professor, Department of Accounting National Yunlin University of Science & Technology.
PEI-YU WENG, Associate Professor, Department of Accounting, National Yunlin University of Science & Technology, Corresponding Author.
CHUNG-MIN HO, Doctoral Student, Department of Accounting, National Yunlin University of Science and Technology.
ABSTRACT
According to the Article 27 of Taiwan’s Company Act, juridical entities may designate representatives to act as directors of the firms in which they invested. However, the regulation does not specify a minimum shareholding threshold needed for such an entity to designate representative directors. Note that the entity-appointed representative directors may be replaced at any time by their juridical entities of affiliated group, and thereby are less likely to effectively act with independence as board of directors. This study empirically examines whether the representative directors of an affiliated group are associated with the firm’s arrangement of sales-based related party transactions.
The empirical results show that the ratio of representative directors appointed by the affiliated juridical entities (denoted as inside representative directors) is positively associated with the magnitude of abnormal sales-based related party transactions and supports the hypothesis. Further evidence, however, shows that this positive relationship is mitigated in firms with substantial numbers of counterbalancing board seats of representative directors appointed by non-affiliated juridical entities. It suggests that the presence of inside representative directors, rather than the existence of juridical entities allowed to designate representatives as board directors, results in greater incidence of abnormal related party transaction arrangements.