Transfer pricing: aligning the research agenda to organizational reality
Abstract
Purpose
The purpose of this paper is to critically review the empirical transfer pricing literature as a means of determining the agenda for future research.
Design/methodology/approach
The review is carried out primarily by searching databases, academic journals and books. Second, professional surveys are reviewed to inform the development of research ideas.
Findings
The understanding and ability to explain international transfer pricing in practice remain limited despite a rapidly increasing tax regulatory pressure on multinational enterprises. One important explanatory factor is that accounting and tax research has not been integrated to a sufficient extent. As a consequence, rather isolated research streams and knowledge building have taken place, failing to leverage the synergies of a combined research approach.
Research limitations/implications
A stronger emphasis on the outcome of specific transfer pricing system designs would improve the literature’s current status in terms of whether the objectives aimed at by the system are actually achieved. A new framework and promising research questions are proposed to guide future work on this issue.
Practical implications
The proposed framework may serve as guidance for practitioners seeking to assess the performance of specific transfer pricing systems and potentially provide directions for refinement of current system designs when dysfunctional consequences are identified.
Originality/value
Previous transfer pricing research has taken a rather isolated approach. This paper is an attempt to guide future transfer pricing research towards an inter-disciplinary approach.
Keywords
Acknowledgements
The authors wish to thank Trond Bjørnenak, Stan Brignall, Martine Cools, Jesse Dillard, Jytte Larsen and Hanne Nørreklit, as well as other participants at a research seminar at SCANCOR, Stanford University (March 2010), for their helpful and constructive comments on previous versions of this paper. Finally, the authors would like to thank two anonymous reviewers and the Editor Zahirul Hoque for their constructive and useful comments. Funding provided by The Danish Institute of State-Authorized Public Accountants (“FSRs Studie- og Understøttelsesfond”) is greatly appreciated.
Citation
Plesner Rossing, C. and Rohde, C. (2014), "Transfer pricing: aligning the research agenda to organizational reality", Journal of Accounting & Organizational Change, Vol. 10 No. 3, pp. 266-287. https://doi.org/10.1108/JAOC-03-2012-0017
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