An empirical study of transfer pricing practice

Wu, Frederick H.; Sharp, Douglas R.

doi:10.1002/tie.5060220207

Cited by 13 publications

(11 citation statements)

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“…Divisional autonomy was not an important purpose. Wu and Sharp (1979) made similar findings. They found that compliance with tax regulations and generally accepted accounting principles ranked higher than the importance of divisional autonomy.…”

Section: Discussionsupporting

confidence: 88%

A Review of the Contemporary Transfer Pricing Literature with Recommendations for Future Research

McAulay

Tomkins

1992

British J of Management

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A transfer price is a value placed on the goods or services which are traded between divisions of an organization. This paper attempts to make the subject of transfer pricing accessible to researchers and others interested in managerial problems so that a very real managerial problem can be studied in a broader managerial context. The not insubstantial literature that has grown up in the transfer pricing area is reviewed and, in particular, a critical evaluation of recent writings in the field is provided. It is shown that little which is unequivocal is known about transfer pricing and that the choices made by managers with regard to transfer pricing are little understood, both with regard to the factors which drive choice and the differences between choice in practice and theoretical interpretations. It is suggested that progress in the area will require a richer understanding of the realities confronting practising managers. Research by means of field studies, particularly case studies, is recommended to provide this. A series of hypotheses and issues, representing the dilemmas facing managers, is provided as a theoretical grounding for such research.

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Section: Discussionsupporting

confidence: 88%

A Review of the Contemporary Transfer Pricing Literature with Recommendations for Future Research

McAulay

Tomkins

1992

British J of Management

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“…In addition, with the increasing of tax rate in the high tax rate country, the intention of transferring profit by transfer pricing gets stronger. Wu and Sharp (1979) indicate that transfer pricing has different standards in different industries. The tax policy, tariff and maximizing firm-wide profit are the crucial determinants.…”

Section: Literature Reviewmentioning

confidence: 99%

Profit Transferring of Multinational Enterprises in the Chinese Industry by Transfer Pricing

Sun¹,

Li²,

Zheng³

2017

Proceedings of the International Conference on Transformations and Innovations in Management

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Decentralized enterprises, such as multinational enterprises (MNEs), adopt transfer prices to coordinate the strategies of the operating functional divisions and marketing divisions in a multinational environment. This paper analyzes the existence of profit transfer though transfer pricing among MNEs in China, and employs quantitative analysis to evaluate the amount of profit that is transferred by this mechanism in the Chinese industry. The contradiction between MNEs' abundant advantages of operating in China and their abnormal low profit margins indicate the existence of profit transfer behavior. The quantitative analysis shows that in the industry, there is more than 300 billion yuan, one fifth of their net profit, transferred yearly outside China and causes 4.9% decline of the total net profit of the Chinese industry from 2012 to 2015.

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“…Negotiated transfer pricing, where division managements choose the transfer price as well as the quantity of intra-firm trade, reflects common practice (Vaysman 1998;Chalos and Haka 1990;Eccles 1985b;Price Waterhouse 1984;Tang, Walter, and Raymond 1979;Wu and Sharp 1979;Vancil 1978). Therefore, we relax the centralized transfer pricing assumption.…”

Section: Negotiated Transfer Pricingmentioning

confidence: 99%

International Transfer Pricing for Goods and Intangible Asset Licenses in a Decentralized Multinational Corporation: Review and Extensions

Dawson

Miller

2009

SSRN Journal

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We review and extend the core literature on international transfer price manipulation to avoid or evade taxes. Under negotiated transfer pricing with a viable bargaining structure, including performance evaluation disconnected from the transfer price, divisions voluntarily exchange accurate information to obtain firm-wide optimality, a result not dependent on restraint from exercising internal market power. For intangible licenses, a larger optimal profit shift for a given tax rate change strengthens incentives for transfer pricing abuse. In practice, an intangible's arm's length range is viewed as a guideline, a context where incentives for abuse materialize. Transfer pricing for intangibles obliges greater tax authority scrutiny.Journal of Economic Literature Classification: F23, H25, H26, L29, O34

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An empirical study of transfer pricing practice

Cited by 13 publications

References 0 publications

A Review of the Contemporary Transfer Pricing Literature with Recommendations for Future Research

A Review of the Contemporary Transfer Pricing Literature with Recommendations for Future Research

Profit Transferring of Multinational Enterprises in the Chinese Industry by Transfer Pricing

International Transfer Pricing for Goods and Intangible Asset Licenses in a Decentralized Multinational Corporation: Review and Extensions

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