The Unintended Consequences of Headquarters’ Involvement in Decentralized Transfer Price Negotiations: Experimental Evidence

2021 ◽  
Author(s):  
Markus Arnold ◽  
Florian Elsinger ◽  
Frederick W. Rankin
Keyword(s):  
Experimental Evidence ◽  
Transfer Pricing ◽  
Unintended Consequences ◽  
Transfer Price ◽  
Information Asymmetries ◽  
Negotiation Behavior ◽  
Decision Biases ◽  
Price Negotiations ◽  
Available Information ◽  
Negotiation Outcome

This study investigates how headquarters’ involvement affects the efficiency of transfer price negotiations. Although prior research explores autonomous transfer price negotiations, evidence suggests that headquarters can become involved in these negotiations, particularly after they fail. Although the likely intention of headquarters’ involvement is to overcome inefficiencies arising from decentralized managers’ inability to agree on a transfer price, we suggest that such involvement can reduce agreement frequency and the efficiency of transfer pricing in coordinating transfers between divisions. Reduced agreement may occur because involvement can reduce managers’ perceived responsibility for the negotiation outcome and because they may expect headquarters’ decision to be more favorable for them than a negotiated price. Headquarters’ involvement can also reduce the coordination efficiency of transfer pricing because of information asymmetries and headquarters’ decision biases in interpreting negotiation failure and using available information. In an experiment, we manipulate whether headquarters’ involvement is absent or present. We also manipulate whether headquarters suggests a nonbinding price (weak involvement) or whether it imposes a price on divisions (strong involvement). Consistent with our predictions, we find that headquarters’ involvement reduces the frequency of negotiation agreement and the coordination efficiency of transfer pricing. Efficiency is reduced more when involvement is strong rather than weak. We contribute to research by studying managers’ negotiation behavior in the realistic setting of potential headquarters’ involvement and by providing evidence on headquarters’ biased perceptions of negotiation impasse and the unintended consequences of its involvement. This paper was accepted by Brian Bushee, accounting.

scholarly journals Health Informatics in Developing Countries: A Review of Unintended Consequences of IT Implementations, as They Affect Patient Safety and Recommendations on How to Address Them

2016 ◽  
Vol 25 (01) ◽  
pp. 70-72 ◽  
Author(s):  
A. Almerares ◽  
D. Luna ◽  
A. Marcelo ◽  
M. Househ ◽  
H. Mandirola ◽  
...  
Keyword(s):  
Information Technology ◽  
Developing Countries ◽  
Patient Safety ◽  
Health Information Technology ◽  
Health Information ◽  
Health Informatics ◽  
Healthcare Organization ◽  
Unintended Consequences ◽  
Alert Fatigue ◽  
Available Information

SummaryBackground: Patient safety concerns every healthcare organization. Adoption of Health information technology (HIT) appears to have the potential to address this issue, however unanticipated and undesirable consequences from implementing HIT could lead to new and more complex hazards. This could be particularly problematic in developing countries, where regulations, policies and implementations are few, less standandarized and in some cases almost non-existing.Methods: Based on the available information and our own experience, we conducted a review of unintended consequences of HIT implementations, as they affect patient safety in developing countries.Results: We found that user dependency on the system, alert fatigue, less communications among healthcare actors and workarounds topics should be prioritize. Institution should consider existing knowledge, learn from other experiences and model their implementations to avoid known consequences. We also recommend that they monitor and communicate their own efforts to expand knowledge in the region.

scholarly journals Do Government Regulations Prevent Transfer Pricing Manipulations?

2011 ◽  
Vol 4 (10) ◽  
Author(s):  
Canri Chan
Keyword(s):  
Multinational Corporations ◽  
Transfer Pricing ◽  
Cash Flows ◽  
Transfer Price ◽  
Tax Rates ◽  
Performance Measurements ◽  
Government Regulations ◽  
Transfer Prices ◽  
Profit Performance ◽  
Efficient Allocations

This study investigated the effects of government regulations and incentives on the setting of transfer prices. I found significant main effects of both variables on transfer price choices. Transfer pricing is important, particularly for Multinational Corporations (MNCs), because of increased trends toward globalization of business activities and, simultaneously, decentralization. These trends have led to increased pressures for sound internal pricing systems, specifically transfer pricing, in order for organizations to ensure optimal and efficient allocations of organization resources and to provide profit performance measurements (Tang 1992). It has generally been recognized in the literature that in order to maximize after tax cash flows, MNCs shift profits from high to low tax jurisdictions. Governments in some countries, particularly those with high tax rates, are greatly concerned as to whether or not companies attempt to avoid tax liabilities via transfer pricing manipulation, specifically in terms of trying to shift profits to lower tax jurisdictions, and have enacted laws to limit transfer price choice.

scholarly journals Flaws in taxation of transnational corporations using the transfer-pricing rules

2020 ◽  
pp. 58-63
Author(s):  
Anastasiia Andreevna Iugina
Keyword(s):  
Transfer Pricing ◽  
Transnational Corporations ◽  
Transnational Corporation ◽  
International Taxation ◽  
Lack Of Information ◽  
Pricing Rules ◽  
The Subject ◽  
Definition Of ◽  
Available Information

The subject of this research is the transfer-pricing rules applied in various countries, their peculiarities and flaws from the standpoint of approach to taxation of transnational corporations overall; as well as practical issues of implementation of transfer-pricing rules for transnational corporations and fiscal authorities, namely the problems of avoidance of taxation by the representatives of transnational corporations and ambiguity of the applied approaches towards regulation. The author examines differences in the rules applied by various jurisdictions, as well as law enforcement problems emerging thereof. Relevance of the topic is substantiated by high significance of transfer-pricing rules for taxation of transnational corporations, as well as the need for ensuring universality in international taxation. The main conclusions lie in determination of substantial ambiguity in the transfer-pricing riles, associated with the lack of information on comparable transaction in the available information systems, as well as assessment of rules with regards to each individual situation. The mechanism employed by the Organization for Economic Cooperation, aimed ate elimination of flaws in transfer-pricing rules, such as consensual procedure, are expensive and often ineffective for transnational corporations. Therefore, elimination of dual taxation is achieved only in some situations. Differences of legislation on transfer pricing in various jurisdictions can also lead to dual taxation of transnational corporations. Moreover, the “arm’s length” principle do not allow reflecting synergetic effects that emerge in the context of activity of transnational corporation, and thus, definition of taxation base within the framework of acting transfer-pricing rules is incomplete.

scholarly journals Thymodepressin—Unforeseen Immunosuppressor

Molecules ◽  
2021 ◽  
Vol 26 (21) ◽  
pp. 6550
Author(s):  
Vladislav I. Deigin ◽  
Julia E. Vinogradova ◽  
Dmitry L Vinogradov ◽  
Marina S. Krasilshchikova ◽  
Vadim T. Ivanov
Keyword(s):  
Experimental Evidence ◽  
Synthetic Peptide ◽  
Biomedical Applications ◽  
Biological Properties ◽  
Peptide Drug ◽  
Wide Range ◽  
History Of ◽  
Available Information

The paper summarizes the available information concerning the biological properties and biomedical applications of Thymodepressin. This synthetic peptide drug displays pronounced immunoinhibitory activity across a wide range of conditions in vitro and in vivo. The history of its unforeseen discovery is briefly reviewed, and the current as well as potential expansion areas of medicinal practice are outlined. Additional experimental evidence is obtained, demonstrating several potential advantages of Thymodepressin over another actively used immunosuppressor drug, cyclosporin A.

scholarly journals Transfer pricing rules in EU member states

2010 ◽  
Vol 58 (3) ◽  
pp. 243-250 ◽  
Author(s):  
Veronika Solilová
Keyword(s):  
Free Market ◽  
Transfer Pricing ◽  
Transfer Price ◽  
Market Conditions ◽  
Member States ◽  
Tax Havens ◽  
Eu Member States ◽  
Pricing Rules ◽  
Arm’S Length Principle ◽  
Accepted Standard

One of the important area of international taxes is transfer pricing. Transfer price is a price set by a taxpayer when selling to, buying from, or sharing resources with a related (associated) person. The tran­sac­tions between these persons should be assessed at their arm’s length price in according the arm’s length principle – international accepted standard – as the price which would have been agreed between unrelated parties in free market conditions. This paper is focused on the tranfer pricing rules used in particular EU Member States so as if EU Member States apply the arm’s length principle, define the related persons, apply recommendations of the OECD Guidelines, use the transfer pricing methods, require TP Documentation, exercise specific transfer pricing audit or impose specific penalties and apply APAs. Transfer pricing rules should prevent taxpayers from shifting income to related person organized in tax havens or in countries where they enjoy some special tax benefit.

Negotiated Transfer Pricing: Is Fairness Easier Said than Done?

2002 ◽  
Vol 77 (3) ◽  
pp. 571-593 ◽  
Author(s):  
Steven J. Kachelmeier ◽  
Kristy L. Towry
Keyword(s):  
Social Behavior ◽  
Social Presence ◽  
Computer Network ◽  
Transfer Pricing ◽  
Market Price ◽  
Transfer Price ◽  
Competitive Environment ◽  
Actual Behavior ◽  
Face To Face ◽  
The Social

Questionnaire responses reported by Luft and Libby (1997) reveal that transfer price negotiators expect fairness-based price concessions that moderate the influence of an outside market price when the outside market price strongly favors one of the parties. We examine whether these expectations of fairness extend to the actual prices that result from real-cash negotiations. Findings indicate that expectations of fairness-based price concessions do not survive actual negotiations when participants negotiate over a computer network with no communication other than bids, asks, and acceptances. Conversely, both expectations and actual negotiated outcomes reflect fairness-based price concessions when participants negotiate in a face-to-face setting with unrestricted communication. Together, these results imply that the extent to which questionnaire-based judgments of social behavior generalize to actual behavior depends on the whether the competitive environment suppresses or reinforces the social presence necessary to sustain phenomena such as preferences for fairness.

Transfer Pricing Based on Actual Cost

2003 ◽  
Vol 15 (1) ◽  
pp. 177-192 ◽  
Author(s):  
Savita A. Sahay
Keyword(s):  
Production Cost ◽  
Transfer Pricing ◽  
Transfer Price ◽  
Actual Cost ◽  
Pricing Policy ◽  
Unit Production Cost ◽  
Entire Class ◽  
Cost Of Production ◽  
The Cost

This paper analyzes a simple transfer-pricing policy based on the actual cost of production. I show that the performance of actual cost-based transfer pricing can be improved by using an additive markup above the unit production cost. I also show that this additive policy dominates an entire class of alternative markup policies, including the more common multiplicative policy, in which the transfer price is set at the actual cost plus a percentage markup. The optimal additive markup is shown to increase with increasing prices for the firm's product, and decrease with the cost of the supplying division's investment.

Transfer Pricing System Based on the Method of Cash Flows Redistribution

2019 ◽  
Vol 8 (3) ◽  
pp. 67-74
Author(s):  
С. Ребров ◽  
S. Rebrov
Keyword(s):  
Transfer Pricing ◽  
Market Price ◽  
Cash Flows ◽  
Transfer Price ◽  
Negative Consequences ◽  
Average Value ◽  
System A ◽  
Pricing System ◽  
Research Analysis

The article describes the system of transfer pricing based on the method of cash flows redistribution, developed by the author. The article describes such concepts as transfer price, transfer pricing, transfer pricing system. Methodological tools of research: analysis, synthesis, system approach. The author used the method of cash flows redistribution, the description of which is given in this article. The transfer pricing system developed by the author is based on the determination of the transfer price interval on the basis of the transfer pricing methods allowed by tax law, as well as the average value of this interval. This average value can be considered as the average market price, which is determined by the specifics of transfer pricing methods. If there is a deviation from the average market price, there is a redistribution of funds between the subjects of the transaction. For the control of transfer price introduced the coefficient of cash flows redistribution. To manage the transfer pricing system, a matrix of cash flow redistribution coefficients was introduced, as well as the account "redistributed funds". The positive and negative consequences of the introduction of this system of transfer pricing are considered.

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