What characterizes entities that are considered related parties?

Entities that are considered related parties are characterized by having a special relationship that influences their financial transactions. This includes entities that are members of the same group or have joint control. When entities are part of the same group, it typically means they are under common control or ownership, and thus transactions between them may not reflect market conditions, making it essential for financial reporting purposes to disclose these relationships and the nature of transactions.

Having joint control implies that the entities share control over a joint arrangement, which might affect decision-making and financial arrangements. This close association can lead to transactions that might not occur between unrelated parties, highlighting the need for transparency and proper disclosure in financial reports.

In contrast, the other choices do not define related parties accurately. Although management being similar can indicate a level of relationship, it does not necessarily imply a financial or control connection. Similarly, being in the same geographic region does not inherently create a related party relationship; entities may operate independently despite their location. Lastly, operating in largely unrelated markets would typically point away from a related party relationship, as it suggests a lack of influence or control between the entities.