Current Trends and Corporate Cases in Transfer Pricing

by Tang, Roger Y. W.

• ISBN13: 9781567205503
• ISBN10: 156720550X
• Format: Hardcover
• Copyright: 2002-04-30
• Publisher: Praeger Pub Text

Summary

Global changes in business and tax environments are having profound impact on the volume and direction of intrafirm trade and transfer pricing strategies. Tang reports on the findings of a survey of 95 Fortune 1000 companies, sponsored by the Institute of Management Accountants, and provides highly relevant information not easily found on how companies are reacting to this new business environment. He covers corporate financial goals and strategies and divisonal performance measurements systems, among other topics, and gives highly detailed case studies based on reports from five major respondents to his survey: Whirlpool, Dow Chemical, Guidant Corporation, Masco, and Eaton. Tang's book is essential, up-to-date reading for upper level students, researchers, analysts, and corporate executives in multinational firms worldwide. Tang starts with a presentation of the major changes in the global business environment and explains their impact on intrafirm trade and transfer pricing. In Chapter 2 he reports results of his questionnaire survey, and in Chapters 3 to 7 examines up close the details revealed in his five corporate case studies. He compares these corporations in Chapter 8, focusing on corporate strategies and financial goals, transfer pricing and performance evaluation practices, and concommitant tax planning strategies. He then relates his case study research to other major findings derived from his questionnaire survey, and ends the book with a general, summarizing, analytical conclusion.

Author Biography

ROGER Y. W. TANG is Professor of Accounting, Haworth College of Business at Western Michigan University, where he also holds the Pharmacia Chair of Business Administration. He is a member of the American Accounting Association, Academy of International Business, Institute of Management Accountants, and Institute of Internal Auditors. Well published in the major journals of his field, Tang is the author of four previous books, including two published by Quorum: Intrafirm Pricing in the 1990s (1993) and Intrafirm Trade and Global Transfer Pricing Regulations (1997).

Table of Contents

Exhibits	ix
Preface	xiii
Acknowledgments	xv
Executive Summary	xvii
Global Business Environment and Transfer Pricing	1	(30)
Environmental Changes and Their Impact on Intrafirm Trade and Transfer Pricing	5	(14)
Research Questions and Study Objectives	19	(1)
Some Conceptual Frameworks for Corporate Transfer Pricing	20	(4)
Methodologies and Research Instruments	24	(2)
An Overview of the Book	26	(1)
Bibliography	27	(4)
Major Findings from the Questionnaire Survey	31	(16)
Profile of the Respondent Firms	32	(1)
Transfer Pricing Methods	32	(2)
Environmental Variables of International Transfer Pricing	34	(6)
Systems Objectives, Policy Authority, and Financial Performance Measures	40	(4)
Summary and Conclusions	44	(1)
Bibliography	45	(2)
The Whirlpool Corporation Case	47	(24)
Case Summary	47	(3)
Corporate Vision, Goals, and Strategies	50	(4)
Transfer Pricing Practices	54	(4)
Income Taxes and Tax Planning Strategies	58	(3)
Balanced Scorecard and Performance Measurement System	61	(2)
The Future	63	(3)
Discussion Questions	66	(1)
Appendix	66	(5)
The Dow Chemical Company Case	71	(20)
Case Summary	71	(3)
Dow's Industry Segments and Businesses	74	(2)
Corporate Vision, Goals, and Strategies	76	(4)
Transfer Pricing Practices	80	(2)
Provision for Income Taxes and Effective Tax Rate	82	(1)
The Dow Scorecard and Performance Measures	82	(3)
The Future	85	(4)
Discussion Questions	89	(2)
The Guidant Corporation Case	91	(18)
Case Summary	91	(3)
Corporate Mission, Goals, and Strategies	94	(3)
Segment Data and International Operations	97	(1)
Intercompany Transactions and Transfer Pricing System	98	(4)
Income Taxes and Tax Planning Issues	102	(2)
The Future	104	(3)
Discussion Questions	107	(2)
The Masco Corporation Case	109	(18)
Case Summary	109	(4)
Corporate Organizational Structure, Vision, and Strategies	113	(5)
Transfer Pricing Practices	118	(1)
Income Taxes and Tax Planning Issues	119	(1)
Performance Measures and Incentives	119	(4)
The Future	123	(1)
Discussion Questions	123	(4)
The Eaton Corporation Case	127	(16)
Case Summary	127	(3)
Corporate Mission, Goals, and Strategies	130	(3)
Business and Geographic Segment Information	133	(1)
Transfer Pricing Practices	134	(3)
Income Taxes and Tax Planning Strategies	137	(1)
The Future	137	(5)
Discussion Questions	142	(1)
Comparisons of Corporate Cases and General Conclusions	143	(32)
Basic Financial Information of the Five Companies	143	(2)
Corporate Missions, Strategies, and Financial Goals	145	(2)
Comparison of Profit Performance and Investors' Return	147	(3)
Comparison of Transfer Pricing and Performance Measurement Practices	150	(2)
Comparison of Tax Planning Strategies	152	(3)
Relating Case Research to the Findings from the Questionnaire Survey	155	(1)
General Conclusions	156	(3)
References	159	(2)
Appendixes
A Survey Questionnaire: Transfer Pricing Practices of Large Corporations	161	(10)
B Questions and Topics for Personal Interviews	171	(4)
Index	175