Related party transactions in continental European countries: Evidence from Italy

Related party transactions (RPTs) are potentially either efficient arrangements or tools for self-dealing. Unlike previous empirical studies using data from the United States or developing countries, this article focuses on RPTs in Italy. First, the article compares Italian RPT regulation and disclosure requirements with those of two major Continental European countries (France and Germany). This comparison highlights the burdensome character of the Italian discipline compared with the French and German regulations. Second, it presents data on RPTs disclosed by Italian listed companies. The data indicate that ordinary intra-group commercial and borrowing activities are the most common types of RPTs. Third, the article examines the relationship between RPTs and financial/governance variables used as proxies for costs of, and incentives for, tunnelling. Only a weak association emerges between those variables and RPTs, providing very limited indication of potentially opportunistic behaviour.