The The Effect Of Related-Party Transactions On The$ Financial Performance$ Of The Global Defense Industry

Sugeng Handoyo; Sri Yanto; Suwito Suwito

doi:10.55227/ijhess.v4i5.1496

Authors

Sugeng Handoyo Universitas Pertahanan RI
Sri Yanto Republic Indonesia Defense University
Suwito Suwito Republic Indonesia Defense University

DOI:

https://doi.org/10.55227/ijhess.v4i5.1496

Abstract

The global defense industry is a critical sector that frequently engages in related-party transactions, including payables, purchases, receivables, and sales. These transactions, while legal, can raise concerns about efficiency and transparency, as they have the potential to influence a company's financial performance significantly. Understanding their impact becomes even more essential amid increasing international competition. This study investigates the influence of related-party transactions on the financial performance of defense industry companies, using Return on Assets (ROA) as the primary performance indicator. The research employs panel data regression analysis with the support of the Eviews 13 application. The dataset consists of financial information from 15 companies listed in the Defense News Top 50 Defense Companies during the period 2021–2023. The results show that partially, payables, purchases, receivables, and sales$ transactions$ with$ related- parties$ do not have a significant influence $on ROA. Simultaneously, however, these transactions significantly affect$ the$ $company's financial performance$. Limitations in disclosing related-party$ transaction data are the main obstacle in this study. For$ future$ research, it$ is recommended to expand$ the$ sample$ coverage and use$ additional data sources to obtain more comprehensive results

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