The primary purpose of this study is to contribute to a deeper understanding of the economic consequences of related-party transactions (RPTs) and earnings management on frm performance, market efciency, and investment decisions by investigating how critical characteristics of audit committees—such as gender diversity, fnancial expertise, and independence— moderate the relationship between RPTs and earnings management, the research provides insights into the mechanisms that can safeguard the integrity of fnancial reporting. This study aims to bridge the gap in the existing literature by ofering empirical evidence of how audit committee oversight can mitigate managerial opportunism, thus ensuring that fnancial reports accurately refect a frm’s economic activities, which is critical for efcient capital markets and informed decisionmaking by business economists. This paper explores the intricate dynamics of related-party transactions, a distinctive facet of business dealings with implications for shareholder interests. The study meticulously examines the nuanced relationship between related-party transactions and both accrual and real earnings management, shedding light on potential mechanisms through which managerial opportunism may manifest. Additionally, the research delves into the moderating infuence of key audit committee characteristics—gender diversity, fnancial expertise, committee size, and member independence—on the relationship mentioned above. Leveraging data from 1683 year-company observations spanning 2016 to 2020, the study employs a multivariate regression model, panel data analysis, and RStudio statistical software. The fndings afrm a signifcant association between related-party transactions and both accrual and real earnings management. Moreover, the study reveals that gender diversity, fnancial expertise, and independence of audit committee members serve as infuential moderators in this relationship. However, audit committee size does not signifcantly impact the connection between related-party transactions and earnings management. The research’s innovative approach lies in concurrently considering accrual and real earnings management in the context of related-party transactions and exploring the interactive efects of audit committee characteristics—an unexplored aspect. These fndings contribute to a nuanced understanding of the intricate interplay between corporate transactions, earnings management, and the regulatory oversight provided by audit committees.

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