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Examining the role of transfer pricing as a strategy for multinational firms

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  • Cravens, Karen S.

Abstract

In contrast to a purely tax-driven mechanism, international transfer pricing can be considered as a means to accomplish corporate objectives and thus create strategic consequences. This paper examines the results of a survey of executives of US-based multinational firms who describe the international transfer pricing objectives and strategies of their firms. Results indicate that executives are not solely focused on taxation issues as the primary objective of international transfer pricing. Multinationals employ transfer pricing to assist in achieving competitive advantage and other corporate objectives as well. This study investigates the influence of transfer pricing on corporate performance and the link involving the effectiveness of transfer pricing in accomplishing objectives. In general, executives perceive that transfer pricing does influence measures of corporate performance. This is supported by the finding that transfer pricing also contributes toward achieving objectives.

Suggested Citation

  • Cravens, Karen S., 1997. "Examining the role of transfer pricing as a strategy for multinational firms," International Business Review, Elsevier, vol. 6(2), pages 127-145, April.
    • Handle: RePEc:eee:iburev:v:6:y:1997:i:2:p:127-145
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    Cited by:

    1. Marcel Boyer, 2017. "Méthodes avancées d’évaluation d’investissements / Advanced Methods of Investment Evaluation - Tome 1," CIRANO Monographs, CIRANO, number 2017mo-03, March.
    2. Hemling, Lars & Plesner Rossing, Jacob Christian & Hoffjan, Andreas, 2022. "The use of information technology for international transfer pricing in multinational enterprises," International Journal of Accounting Information Systems, Elsevier, vol. 44(C).
    3. Peter Buckley & Jane Frecknall Hughes, 1998. "Transfer pricing and economic functions analysis: the Japanese paradigm," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 621-629.
    4. Taipaleenmäki, Jani & Ikäheimo, Seppo, 2013. "On the convergence of management accounting and financial accounting – the role of information technology in accounting change," International Journal of Accounting Information Systems, Elsevier, vol. 14(4), pages 321-348.
    5. Demirbag, Mehmet & Frecknall-Hughes, Jane & Glaister, Keith W. & Tatoglu, Ekrem, 2013. "Ethics and taxation: A cross-national comparison of UK and Turkish firms," International Business Review, Elsevier, vol. 22(1), pages 100-111.
    6. Cools, Martine & Emmanuel, Clive & Jorissen, Ann, 2008. "Management control in the transfer pricing tax compliant multinational enterprise," Accounting, Organizations and Society, Elsevier, vol. 33(6), pages 603-628, August.
    7. Hussein, Mohamed E. & Kraten, Michael & Seow, Gim S. & Tam, Kinsun, 2017. "Influences of Culture on Transfer Price Negotiation," The International Journal of Accounting, Elsevier, vol. 52(3), pages 227-237.
    8. Lyuben Kirev, 2002. "Triadisation or Globalisation of the R&R in Transnational Corporations," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 3-26.
    9. Cazacu (NEAMTU), Andreea - Lavinia, 2017. "Transfer prices - an international problem," MPRA Paper 83661, University Library of Munich, Germany.
    10. Rougé Jean-François & Chopov Borislav, 2016. "Hypercompetition & Fiscal Attractiveness," Economics, Sciendo, vol. 4(2), pages 75-93, December.
    11. Christensen, Rasmus Corlin, 2022. "Transnational Infrastructural Power of Professional Service Firms," SocArXiv k9bd2, Center for Open Science.
    12. Andreea - Lavinia Cazacu (NEAMTU), 2017. "Transfer Prices - An International Problem," Junior Scientific Researcher, SC Research Publishing SRL, vol. 3(2), pages 19-25, November.
    13. Dan Li & Manuel Portugal Ferreira, 2008. "Internal and External Factors on Firms’ Transfer Pricing Decisions: Insights from Organization Studies," Notas Económicas, Faculty of Economics, University of Coimbra, issue 27, pages 23-38, June.
    14. repec:otg:wpaper:1403 is not listed on IDEAS
    15. Cuzdriorean Dan Dacian & Jurcau Anca Sabina, 2009. "Tax Optimization Through Transfer Pricing, Common And Manipulative Practice," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 3(1), pages 872-876, May.
    16. Mai, Nhat Chi, 2020. "The Effects Of The Base Erosion And Profit Shifting (Beps) Action 13 On Transfer Pricing Practices: A Comparative Empirical Study Of New Zealand And Vietnam," OSF Preprints gq27c, Center for Open Science.
    17. Fulop , Renata, 2023. "Transfer Pricing: Growth of the Concept and Fiscal Regulations in Europe," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2023), Hybrid Conference, Dubrovnik, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Hybrid Conference, Dubrovnik, Croatia, 4-6 September, 2023, pages 341-352, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    18. Aleksi Eerola & Arjen H. L. Slangen, 2022. "A Review of International Management Research on Corporate Taxation," Management International Review, Springer, vol. 62(5), pages 643-680, October.
    19. Kumar, Satish & Pandey, Neeraj & Lim, Weng Marc & Chatterjee, Akash Nil & Pandey, Nitesh, 2021. "What do we know about transfer pricing? Insights from bibliometric analysis," Journal of Business Research, Elsevier, vol. 134(C), pages 275-287.

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