Related party transactions in New Zealand: An empirical study of a flawed system

Duncan C Jessep, John Farrar, Susan Watson

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Between 2006 and 2010 approximately 32 finance companies went into receivership, liquidation or were bailed out by the government in New Zealand. The total combined outstanding debt from these failures exceeds NZ$5.3 billion. Excessive, unregulated and, in some cases, undisclosed related party transactions have been cited by commentators as being a contributing reason for many of these failures. In light of these concerns, this article, using empirical analysis, questions whether the regulatory approach to related party transactions in New Zealand is adequate and, where applicable, suggests improvements to that framework, making comparisons with Australia. It concludes that Australia has a more rigorous system but that related party transactions are inherently problematic under any circumstances.
Original languageEnglish
Pages (from-to)110-142
Number of pages33
JournalCompany and Securities Law Journal
Volume30
Issue number2
Publication statusPublished - 2012

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Jessep, Duncan C ; Farrar, John ; Watson, Susan. / Related party transactions in New Zealand : An empirical study of a flawed system. In: Company and Securities Law Journal. 2012 ; Vol. 30, No. 2. pp. 110-142.
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Related party transactions in New Zealand : An empirical study of a flawed system. / Jessep, Duncan C; Farrar, John; Watson, Susan.

In: Company and Securities Law Journal, Vol. 30, No. 2, 2012, p. 110-142.

Research output: Contribution to journalArticleResearchpeer-review

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AB - Between 2006 and 2010 approximately 32 finance companies went into receivership, liquidation or were bailed out by the government in New Zealand. The total combined outstanding debt from these failures exceeds NZ$5.3 billion. Excessive, unregulated and, in some cases, undisclosed related party transactions have been cited by commentators as being a contributing reason for many of these failures. In light of these concerns, this article, using empirical analysis, questions whether the regulatory approach to related party transactions in New Zealand is adequate and, where applicable, suggests improvements to that framework, making comparisons with Australia. It concludes that Australia has a more rigorous system but that related party transactions are inherently problematic under any circumstances.

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