Acta Oeconomica Pragensia 2006, 14(3):73-81 | DOI: 10.18267/j.aop.94

Agency Relationship and Transfer Pricing Inefficiency

Libor Kaiser
Ing. Libor Kaiser - Ph.D. student; Department of Corporate Finance and Valuation, Faculty of Finance and Accounting,. University of Economics, Prague, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic, kaiserl@vse.cz

Transfer pricing policy is a very important activity within multinational firms. The importance of this policy has been increasing since the time of globalization has come. There are many reasons for implementing such a policy. The international capital mobility allows multinational firms to allocate capital among their subsidiaries mainly due to savings connected to the taxation policies of individual states. It is not easy to study transfer pricing because it belongs to best guarded know-how of each firm. In this article I will show possible inefficiencies of transfer pricing using an agency theory point of view.

Keywords: transfer pricing, agency theory, multinational firm, taxation policy
JEL classification: G39

Published: October 1, 2006  Show citation

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Kaiser, L. (2006). Agency Relationship and Transfer Pricing Inefficiency. Acta Oeconomica Pragensia, 14(3), 73-81. doi: 10.18267/j.aop.94
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    References

    1. BALDENIUS, T - REICHELSTEIN, S. J. (2006): External and Internal Pricing in Multidivisional Firms. Journal of Accounting Research, 2006, Vol. 44, No. 1, pp. 1-28. Go to original source...
    2. JENSEN, M. C. - MECKLING, W. H. (1976): Theory ofthe Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 1976, Vol. 3, No. 4, pp. 305-360. Go to original source...

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