Thesis (M.Sc.)-Cairo University,2022.

Bibliography: p.126-140.

Lecturer of Accounting, Faculty of Commerce, Cairo University 2022 Abstract The main purpose of this research is examining the effect of related party transactions (RPTs) and family ownership (FO) on earnings management (EM). Moreover, this research aims to investigate the moderating effect of family ownership on the association between RPTs and EM. Data was collected from 58 Egyptian firms listed in the Egyptian stock market. The research sample covers a period of five years from 2016 to 2020. A fixed effect model (FEM) regression is employed to test the research hypotheses. Accrual-based EM is measured by using discretionary accruals estimated by modified Jones model. RPTs are measured by scaling total amount of RPTs to total assets to indicate whether such transactions represent 1% of total assets or not. Percentage of shares held by family members is used to measure FO. The results reveal that there is a significant negative association between RPTs and accrual EM, suggesting that RPTs aren’t used opportunistically but used efficiently to the advantage of the firm. Furthermore, the results show that there is a negative association between FO and earnings management, implying that family members tend to avoid risky behaviors such as EM to protect the firm’s name and reputation. Finally, it is found that FO, as a regulatory corporate governance mechanism, strengthens the negative association between RPTs and EM