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1 – 10 of over 47000
Article
Publication date: 1 April 2000

Peter B. Oyelere and John D. Turner

Very little attention has been paid to transfer pricing issues in the financial services sector Europe‐wide. This article reports on transfer pricing choices of UK…

3998

Abstract

Very little attention has been paid to transfer pricing issues in the financial services sector Europe‐wide. This article reports on transfer pricing choices of UK deposit‐taking institutions. It is based on the results of an exploratory survey carried out on UK‐based banks and building societies. The main aim is to investigate their transfer pricing methods and objectives as well as the structure and line of responsibility for their transfer pricing decisions. The results of the survey reveal that the achievement of overall corporate goals is the highest ranked transfer pricing objective. Market pricing is the most widely used method among the institutions. Salient differences were however found between the transfer pricing choices of banks, on the one hand, and building societies, on the other.

Details

European Business Review, vol. 12 no. 2
Type: Research Article
ISSN: 0955-534X

Keywords

Article
Publication date: 1 February 1985

Lynette L. Knowles and Ike Mathur

Two companion articles have considered transfer pricing objectives and factors influencing the designing of these systems. This article, the last in the series, treats the…

Abstract

Two companion articles have considered transfer pricing objectives and factors influencing the designing of these systems. This article, the last in the series, treats the topic of designing transfer pricing systems. Since many multinational firms have subsidiaries in the U.S., it is worthwhile to consider the U.S. Internal Revenue Service regulations regarding transfer pricing. Transfer pricing systems can be designed under a variety of alternative market scenarios. These topics are discussed in the first two sections of the article. The designing of profit‐oriented and cost‐oriented transfer pricing systems are considered in the next two sections. A mention of methods for selecting transfer pricing systems concludes the article.

Details

Managerial Finance, vol. 11 no. 2
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 1 March 1982

Mostafa reviews seven studies in the UK which were conducted during the period 1967 to 1976 and thirteen undertaken in the United States between 1965 and 1979. The UK…

Abstract

Mostafa reviews seven studies in the UK which were conducted during the period 1967 to 1976 and thirteen undertaken in the United States between 1965 and 1979. The UK surveys concentrated mainly on the domestic market whereas in the United States some of the studies were extended to take account of international markets. Several conclusions were drawn from the review:

Details

Managerial Finance, vol. 8 no. 3/4
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 1 March 1990

Albert Galway

An examination of the philosophy and methodologyof transfer pricing is provided. The concept oftransfer pricing is that, within a manufacturingcompany, one department, on…

1901

Abstract

An examination of the philosophy and methodology of transfer pricing is provided. The concept of transfer pricing is that, within a manufacturing company, one department, on transferring its output to another department, should regard this transfer as a sale and that there should be a definite policy on setting the selling price. The most usual methods of transfer pricing – cost, cost plus, market price and dual pricing, are evaluated and worked examples of transfer pricing implications in practice, included.

Details

Management Decision, vol. 28 no. 3
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 1 March 1982

In this paper the main objectives of transfer pricing are discussed as well as methods that have been suggested for each objective to be achieved. Also investigated are…

Abstract

In this paper the main objectives of transfer pricing are discussed as well as methods that have been suggested for each objective to be achieved. Also investigated are the interrelationships among transfer pricing objectives, methods, and circumstances under which companies operate

Details

Managerial Finance, vol. 8 no. 3/4
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 4 February 2014

Yair Holtzman and Paul Nagel

The purpose of this paper is to introduce transfer pricing to a broader community of business leaders who might not be familiar with the importance of this concept…

4695

Abstract

Purpose

The purpose of this paper is to introduce transfer pricing to a broader community of business leaders who might not be familiar with the importance of this concept. Transfer pricing is a term used to describe inter-company pricing arrangements relating to transactions between related business entities. These can include transfers of intellectual property, tangible goods, services, and loans or other financing transactions. Why is Transfer Pricing Important? The potential for US federal business tax reform and the rigorous pursuit of transfer pricing adjustments by foreign countries are among the top global tax concerns facing senior US tax professionals.

Design/methodology/approach

General viewpoint based upon years of consulting work on the topic.

Findings

The relevance and importance of transfer pricing is emphasized to a larger business community.

Practical implications

This is an excellent introduction to the topic of transfer pricing.

Originality/value

The paper is valuable in that it can be read and appreciated by a wide range of audiences.

Details

Journal of Management Development, vol. 33 no. 1
Type: Research Article
ISSN: 0262-1711

Keywords

Article
Publication date: 30 October 2019

Jan M. Smolarski, Neil Wilner and Jose G. Vega

This paper aims to examine the applicability of real options methodology with respect to developing internal transfer pricing mechanisms. A pervasive theme in existing…

Abstract

Purpose

This paper aims to examine the applicability of real options methodology with respect to developing internal transfer pricing mechanisms. A pervasive theme in existing models is their inability to handle the dynamic and volatile nature of today’s business environment, as well as their lack of objective managerial flexibility. The authors address these and other issues and develop a transfer pricing mechanism based on Black–Scholes and the binomial options pricing methodology, which is better suited in today’s dynamic business environment.

Design/methodology/approach

The authors use a conceptual approach in developing theoretical justifications and show, practically, how a transfer price can be developed using two different real options pricing models.

Findings

The authors find that real options transfer price mechanism (real options framework [ROF]) can effectively deal with many of the issues that permeate a modern organization with complex multi-dimensional operations. The authors argue that uncertainty and behavioral issues commonly associated with setting transfer prices are better handled using a transfer pricing mechanism that preserves flexibility at the business unit level, the managerial level and the firm level. The approach allows for different managerial styles in both centralized and decentralized sub-units within the same organization. The authors argue that an open multi-dimensional framework using real options is suitable under conditions of uncertainty and managerial opportunism.

Practical implications

ROF-based transfer pricing may be significant in that firms can use it as a tool to manage an organization by setting the prices centrally and at the same time allowing managers to select the transfer price that best suits their specific situation and operating conditions. This may result in a more efficient and more profitable organization.

Originality/value

The contribution of the paper is the melding of the ROF from the finance literature with the accounting problem of setting a transfer price for items lacking a competitive market price. The authors also contribute to existing research by explicitly developing a framework that values managerial flexibility, takes into account uncertainty and considers the behavioral aspects of the transfer pricing process. The authors establish the conditions under which a generic real options model is a feasible alternative in determining a transfer price.

Details

Journal of Accounting & Organizational Change, vol. 15 no. 4
Type: Research Article
ISSN: 1832-5912

Keywords

Article
Publication date: 17 July 2013

Mark Cecchini, Robert Leitch and Caroline Strobel

Transfer pricing stands at the heart of a MNE management control system. We review the theories of TCE and RBV and develop antecedents and consequences of transfer prices

Abstract

Transfer pricing stands at the heart of a MNE management control system. We review the theories of TCE and RBV and develop antecedents and consequences of transfer prices based on these theories. We propose viewing transfer pricing decisions through a TCE and RBV value chain framework. We review a sample of transfer pricing literature based on this theoretical perspective and show how it fits within our framework. Our framework suggests that setting transfer pricing policy is indeed a complex problem that includes many factors and has many consequences, some of which may be at odds with each other. We give some suggestions for future research based on this framework.

Details

Journal of Accounting Literature, vol. 31 no. 1
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 7 January 2019

Mohammed Amidu, William Coffie and Philomina Acquah

This paper aims to investigate how transfer pricing (TP) and earnings management affect tax avoidance of firms in Ghana.

2951

Abstract

Purpose

This paper aims to investigate how transfer pricing (TP) and earnings management affect tax avoidance of firms in Ghana.

Design/methodology/approach

The authors use a panel data set from 2008 to 2015 to further shed light on transfer pricing-tax avoidance nexus by examining the complex interaction of three key variables: transfer pricing, earnings management and tax avoidance.

Findings

The results show that almost all the sample firms have engaged in some form of transfer pricing strategies and the manipulation of earnings to avoid tax during 2008-2015. There is evidence to suggest that non-financial multinational corporations manipulate more earnings than the financial firms while financial firms also use more TP than non-financial firms. The overall results suggest that the sensitivity of tax avoidance to transfer pricing decreases as firms increase their earnings management. By extension, these results have important policy implication for policymakers in assessing the effectiveness of tax laws relating to transfer pricing.

Originality/value

The authors investigate how transfer pricing and earnings management affect the avoidance of firms operating in Ghana.

Details

Journal of Financial Crime, vol. 26 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

Open Access
Article
Publication date: 29 February 2016

Alfa Rahmiati and Resti Sandi

Practices of transfer pricing in among companies having “special relationship” (hubungan istimewa in Bahasa Indonesia, this study uses a term of ‘related party’) to others…

1130

Abstract

Practices of transfer pricing in among companies having “special relationship” (hubungan istimewa in Bahasa Indonesia, this study uses a term of ‘related party’) to others are very common nowadays. However, the complexity of transfer pricing strategy and practices in many companies made the use of individual level data become insufficient, therefore we conduct an ethnographic study to explore how taxpayer determines the reasonable transfer pricing based on five methods (i.e. Comparable uncontrolled Price/CUP, Resale Price/RPM, Cost Plus, Transactional Net Margin Method/TNMM and Profit Split Method/PSM).This research aims to execute a tax strategy based on those methods, which finally derive the amount of product price according to arm.s length transfer pricing rule. We collected the data through interviews, observation and literatures. They are based on several months of personal experience of field research in and around the manufacturing enterprise. The results showed that the tax expense could be reduced by using Cost Plus Method, but practically, the application of this method requires more in-depth analysis and a very reliable & comparative data so the company must spend a lot of cost and time to process it. The Transactional Net Profit Method is proved to be the best application for the enterprise to optimize tax expenses because the data used for the analysis were more accessible which saved time and costs.

Details

Asian Journal of Accounting Research, vol. 1 no. 1
Type: Research Article
ISSN: 2459-9700

1 – 10 of over 47000