<![CDATA[This research aims to answer two questions. First, whether relatedparty transactions relate to earnings management and, if they do, whichtransaction, among those reported, that correlate with earningsmanagement? Second, since those transactions are characterized by theircomplexities and those complexities, then, relate to informationasymmetry, does auditor quality can mitigate earnings managementpractice?We choose non-financial related firms as our samples. Those 45chosen firms were listed from 1996 to 2006 on JSX. We conduct testsbased on full samples and split samples. Samples are divided based onthe size of their accounting firms. Results show that two out of six relatedparty transactions measures are statistically related to earningsmanagement. Moreover, samples audited by bigger accounting firms havehigher abnormal accruals than samples audited by smaller accountingfirms. This result implies that the earlier manage their earnings number.Even though our results are not consistent among differentmeasures of related party transactions, we, however, can conclude thatopportunistic managers can take advantage of the transactionscomplexities. We argue that standards must be reconsidered how thosetransactions should be disclosed to public. Auditors must be made awareof the consequences to them of not being aware of this opportunisticbehavior.]]>
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