Final answer:
Key management personnel are considered related parties due to their potential to affect a company's policies and direction, owing to their decision-making roles. Although transparency of company information reduces the need to know managers personally, the influence of key personnel on company performance remains noteworthy.
Step-by-step explanation:
Key management personnel are regarded as related parties because they have the potential to influence the financial and operating policies of a company. This influence comes from the critical role they play in decision-making and the direction of the company's strategy and operations. Despite the increasing availability of information on a company's products, revenues, costs, and profits, these individuals can impact the resource allocation and are privy to inside information that can impact the company's performance and the interests of its stakeholders, such as bondholders and shareholders.
As a company matures, the need for investors to know the managers personally declines, as financial information becomes more transparent and widely disseminated. Nevertheless, the role of key management remains significant as these individuals continue to dictate the company's trajectory, which can affect investment decisions and the allocation of financial capital provided by outside investors.