Objective: The present article examined the relationship between related party transaction and abnormal stock returns. Methodology: The methodology was based on the application of panel data and testing the hypotheses through the analysis of multiple regression. Results: The results obtained from 71 companies listed on Tehran Securities Exchange from 2007 to 2013 represented a significant negative relationship between related party transaction and abnormal returns. Conclusion: Finally, Training managers and stakeholders can help the implementation of proper corporate governance. Shareholders should be aware of the benefit of the existence of independent outside directors on the board, the audit committee, institutional investors etc. which are among the standards of corporate governance.
