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  • 1. TRANSFER PRICING IN MULTINATIONAL COMPANIES Empirical evidence in medium-sized and large Slovene parent companies PRENOSNE CENE V MULTINACIONALNEM PODJETJU Izsledki raziskave v srednjih in velikih slovenskih obvladujočih podjetjih Maja Zaman University of Ljubljana Faculty of Economics Kardeljeva pl. 17 1000 Ljubljana Slovenia maja.zaman@ef.uni-lj.si
  • 2. Povzetek V skladu z načelom nevtralnosti (angl.: arm’s length principle), lahko prenosne cene med povezanimi podjetji v mednarodnem okolju temeljijo na tržnih ali na stroškovnih podlagah. V članku proučujemo dve določljivki prenosnih cen: velikost podjetja kot notranjo določljivko in stabilnost poslovnega okolja kot zunanjo določljivko. Podatki, zbrani z raziskavo, ki je bila izvedena v srednjih in velikih slovenskih obvladujočih podjetjih, kažejo, da velikost podjetja vpliva na izbrano strategijo določanja prenosnih cen. Da bi se izognila dvojnemu obdavčenju kot posledici prilagajanja prenosnih cen po opravljenem davčnem nadzoru, večja podjetja pogosteje kot manjša določajo prenosne cene na ravni primerljivih tržnih cen. Na drugi strani pa v povezavi s stabilnostjo poslovnega okolja, v katerem delujejo odvisna podjetja v tujini, podatki ne pokažejo statistično značilnih razlik, zato ne moremo potrditi hipoteze o njegovem vplivu na politiko prenosnih cen v multinacionalnem podjetju. Ključne besede: multinacionalna podjetja, obvladujoče podjetje, odvisna podjetja v tujini, prenosne cene, mednarodno računovodstvo. Abstract Within the framework of the arm’s length principle, transfer prices between affiliated companies can be market-based and non-market-based. In the paper we look at two theoretically examined determinants of transfer pricing: size as a firm-specific variable and business environment stability as an environmental variable. The data for medium-sized and large Slovenian parent companies reveal that company size influences its transfer pricing strategies. Although all companies are exposed to audits, we claim that larger companies have above-average exposure to them. To avoid double taxation as a result of transfer price adjustments, these companies more frequently use prevailing market prices in their transfer pricing strategies. On the other hand, any conclusion, related to the influence of stability within the business environment of foreign subsidiaries on the transfer pricing system, cannot be extrapolated to the entire population of Slovenian multinational companies. Keywords: multinational companies, parent company, foreign subsidiaries, transfer prices, international accounting. 1. Introduction 2
  • 3. In an international study, focusing on international tax and transfer pricing issues, carried out in over 800 international businesses in 2003, sixty-eight percent of all survey respondents said that transfer pricing was the biggest tax issue they faced (Ernst & Young, 2004). The importance of international transfer pricing issues can also be supported by the growing value of intra-company transfers: if these were valued in USD billion in the early 1990s then estimates at the start of the millennium reached USD 1.6 trillion or one-third of world trade (Mehafdi, 2000). In this paper, we define transfer pricing as “determination of prices charged or paid upon the transfer of physical goods and intangible property or the supply of services between affiliated companies in different tax jurisdictions”. Following the trend of growing intra-company transfers, ever more sophisticated transfer pricing rules have been adopted to protect the national tax base. Tax legislation of the vast majority of countries is based on the arm’s length principle. According to this principle, affiliated companies should act as if the transactions between them were being conducted by independent parties. Transfer pricing guidelines, issued by the Organization for Economic Cooperation and Development (OECD) in 1979, and revised in 1995, represent the expression of a consensus among OECD member countries on how to approach transfer pricing issues. In supporting the arm's length principle as the best approach to addressing transfer pricing issues, and confirming the superiority of traditional transfer pricing methods (comparable uncontrolled price method, resale price method and cost plus method), they are substantially similar to the rules set out in section 482 of the IRC in the USA. The arm's length standard embodied in these methods is widely adopted for the following reasons: (1) it is based on a sound economic principle that a competitive market is the best way to allocate resources and reward risks; (2) it puts multinational companies and independent enterprises on an equal footing for tax purposes, thus eliminating any economic distortions that differential tax treatment may create; and (3) it has been successful in the majority of cases (Miesel et al., 2003). Although the idea of the arm’s length principle is clear, it is ever more apparent that the arm’s length principle is a flexible transfer pricing concept capable of being interpreted and implemented in a variety of ways. Within the framework of the arm’s length principle the transfer prices between affiliated companies can still be either market-based and non-market- 3
  • 4. based. The influence of different factors, both at home and in the host country, on the selection of international transfer pricing strategies, has already attracted the attention of researchers. 2. Transfer pricing determinants – literature review Previous research has examined the influence of both firm-specific and environmental variables on the transfer pricing methods used by multinational companies for their international transfers. Regarding firm-specific variables, most existing research on the transfer pricing practices of multinational companies shows that larger companies use different pricing strategies for intra- company transfers. Early findings by Arpan (1972) indicated that the larger the parent company, the more likely it is to use a cost-oriented pricing system. Contrary to early findings, more recent studies mostly reveal the opposite results. Benvignati (1985), for example, reported that large companies (as well as those with a large number of foreign subsidiaries) more frequently adopt market-based transfer pricing. With reference to size, Al- Eryani, Alam and Akhter (1996) also confirmed that the larger the size of a company the more likely it is to use market-based transfer pricing. Among the first authors to discuss the influence of different environmental variables on transfer pricing strategies, Shulman (1969) argued that companies circumvent profit repatriation restrictions by charging a higher price for imports from the parent or related companies. In a profound study Al-Eryani, Alam and Akhter (1996) studied the influence of political factors (expropriation, nationalization, civil wars, political turmoil) and social factors (class conflicts, ethnic conflict) on the transfer pricing system of US-based multinationals. They were unable to conclude that adverse political and social conditions in host countries required multinational companies to rely on non-market-based transfer prices. On the other hand, their evidence confirms that multinational companies use market-based transfer pricing to comply with the laws and regulations of their home as well as host countries. The use of non-market-based pricing is avoided because it may lead to charges of price fixing or tax avoidance. Combining both findings, Al-Eryani, Alam and Akhter concluded that legal rather than economic or social constraints play an important role in the selection of transfer pricing strategies. Opposing their findings are the results of research recently carried out in large 4
  • 5. foreign investment enterprises in China. Chan and Chow showed here that export-oriented companies are more likely to adopt cost-based transfer pricing than those companies aiming at domestic markets only (Chan and Chow, 2001). The work continued with a focus on the association between management’s perception of the importance of environmental variables and their choice of international transfer pricing methods (Chan and Lo, 2004). The evidence of the study indicates that the more management perceives foreign exchange controls in transfer-pricing decisions to be important, the more likely the multinational company will choose a cost-based method. 3. Presentation of the survey Although a number of studies focusing on the influence of various firm-specific and environmental factors on the transfer pricing system in multinational companies has already been carried out in several countries, a similarly profound study has not yet been carried out among Slovenian multinational companies. One of the goals of the survey in Slovenian multinational companies was to determine which factors influence their transfer pricing system. The survey was carried out in 2003 among medium-sized and large Slovenian companies with at least one foreign subsidiary. The initial sample was drawn from the listing of all Slovenian companies that have prepared consolidated financial statements in which a consolidation was made for the Slovenian parent company and its foreign subsidiaries. This initial sample was composed of all parent companies, regardless of their size and type of activities. The initial sample was then reduced. First, all parent companies that did not satisfy the criteria of medium or large companies were excluded. In addition, companies involved in farming, hunting and forestry, fishing, mining, electricity, gas and water supply as well as financial intermediation were excluded. We decided to exclude these companies from the base because due to their operating-related specifics a sample composed of all companies, disregarding their main field of activities, would not be homogenous enough to allow for any generalizing of the statistically derived findings. The sample was not drastically reduced by their exclusion. Data from the Bank of Slovenia (Monthly Bulletin of the Bank of Slovenia 2002: 27-28) show that at the end of 2001 manufacturing companies accounted for 59% of the total value of Slovenian foreign direct investment and commercial companies accounted for 14% of the total value of Slovenian foreign direct investment. 5
  • 6. This final sample comprises 162 medium-sized and large companies. The three-page questionnaires were directly addressed to the CFOs or heads of controlling departments (if agreed in the preliminary presentation of the survey by telephone) and included 12 sets of questions. In most questions a 5-point Likert scale was offered. The first mail out was in February 2003 and the second one to non-responding companies followed in March 2003. By the beginning of May 2003 a total of 86 questionnaires had been returned. This represents a relatively high response rate of 53%. Among these, 17 were medium-sized and 69 were large companies. For the purposes of the research each company selected its largest foreign subsidiary. As a criterion of size, revenues generated in 2002 were used. This criterion led to the following selection of foreign subsidiaries: 54.7% of companies replied that such a subsidiary was located in Croatia (47 companies), 7 companies had their largest subsidiary in Bosnia and Herzegovina, 6 in Germany, 5 in Macedonia, 4 in Serbia and Montenegro, 3 in Poland, 2 in Austria and 1 in Italy, Spain, Denmark, the Netherlands, Slovakia, France, Great Britain, Romania, the USA, Switzerland, Ukraine and the Dutch Antilles. For international transfers between the parent company and its selected foreign subsidiary, the majority of companies (68%) use one of the market-based transfer prices (prevailing market price or adjusted market price). A cost-based transfer pricing system is used by 19% of the companies in the sample and includes transfer prices based on variable cost, marginal cost, total cost and cost-plus methods. Other transfer pricing methods (such as negotiated prices) are used by 13% of the companies. In comparison with research carried out among Slovenian companies in 1998 (Hočevar, Zaman, 1999, pp. 39-43), these results are at first surprising. The 1998 research indicated that the majority of Slovenian companies used cost-based transfer pricing (38%), followed by market-based transfer pricing (33%), negotiated prices (19%) and other methods (10%). Although both surveys were not carried out in the same year and the same sample of companies was not used, we could probably attribute part of these discrepancies to the fact that the more recent survey (2003) focused on international transfers where flexibility is limited by tax legislation and the fact that the transfers are being carried out between independent legal entities which are considered investment responsibility centers. The 1998 survey, on the other hand, did not focus on international transfers. It studied the transfer 6
  • 7. pricing methods used for an evaluation of transfers among responsibility centers within the parent company. 4. Presentation of research hypotheses and results Hypothesis 1: The larger the multinational company, the more likely it is that it will use a market-based transfer pricing strategy. With the first hypothesis we studied whether the size of Slovenian multinational companies influences their transfer pricing systems. Previous research (e.g. Benvignati, 1985) indicated that larger companies are more likely to use market-based transfer pricing methods because their size makes them more visible to government authorities. Recent research by Ernst & Young (2004) confirms that all companies are exposed to audits, but bigger companies have an above-average exposure in this regard1. We believe that the three size criteria (number of employees, total value of assets and revenues) in the context of the presented hypothesis do not equally influence the transfer pricing system in a multinational company. The probability of tax audits is most frequently related to revenues and/or total value of assets, whereas the relationship between the number of employees and the transfer pricing system is not expected. For this reason, we focused on revenues and the value of assets to evaluate the size of a company as a determinant of the transfer pricing system. To test the hypothesis we performed two t-tests for independent samples. Companies that use one of the market-based transfer pricing systems were assigned to group 1. Those companies that establish their transfer prices on other bases were assigned to group 1 Ernst & Young (2004) reports that worldwide one in three completed audits results in an adjustment. Parents report that forty percent of these adjustments led to double taxation and one in seven resulted in some form of penalty being imposed. The signs also indicate that transfer pricing audit activity will increase globally in the near future. In 2003, the US Internal Revenue Service (IRS) announced a mandatory audit review of documentation and transfer pricing on all audits of large and medium-sized taxpayers. Within the last year, in two separate actions the United Kingdom Inland Revenue and the Japan National Tax Administration (NTA) announced new initiatives in their transfer pricing rules enforcement (Ernst & Young, 2004). 7
  • 8. 2. The analysis of the results (Table 1) shows that those companies using market-based transfer prices had, on average, higher revenues (on average SIT 23,689,216,000) than those companies using other transfer prices (on average SIT 19,852,758,000). Table 1: Influence of size on transfer pricing (criterion: revenues) N Mean (total revenues in Std. Deviation Std. Error Mean 1.000 SIT) Market-based 57 23.689.215,53 44.647.165,55 5.913.661,54 Non-market based 27 19.852.757,63 23.288.834,39 4.481.938,26 Total revenues (1.000 SIT) Equal variances Equal variances not assumed assumed Levene's Test for F 3,239 Equality of Variances Sig. 0,076 t-test for Equality of t 0,419 0,517 Means df 82 81,145 Sig. (2-tailed) 0,676 0,607 Mean Difference 3.836.457,90 3.836.457,90 Std. Error Difference 9.148.152,263 7.420.186,216 95 % Confidence Interval Lower -14.362.131,164 -10.926.985,268 95 % Confidence Interval Upper 22.035.046,957 18.599.901,062 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. The analysis of the value of assets (Table 2) also confirmed that companies using market- based transfer prices, had, on average, a higher value of assets (on average SIT 20,503,674,000) than companies using other transfer prices (on average SIT 19,217,046,000). Table 2: Influence of size on transfer pricing (criterion: value of assets) N Mean (value of assets in Std. Deviation Std. Error Mean 1.000 SIT) Market-based 57 20.503.673,54 31.699.333,50 4.198.679,29 Non-market based 27 19.217.045,70 18.266.424,45 3.515.375,02 Value of assets (1.000 SIT) Equal variances Equal variances not assumed assumed Levene's Test for F 2,906 Equality of Variances Sig. 0,092 t-test for Equality of T 0,196 0,235 Means Df 82 78,717 Sig. (2-tailed) 0,845 0,815 Mean Difference 1.286.627,84 1.286.627,84 Std. Error Difference 6.574.942,005 5.476.017,655 95 % Confidence Interval Lower -11.793.026,302 -9.613.722,800 8
  • 9. 95 % Confidence Interval Upper 14.366.281,982 12.186.978,480 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. Although both results are in accordance with the expectations, the differences between the average revenues of the two groups as well as the differences between the average value of assets are insignificant. The t-test of independent samples did not reveal any statistically significant differences and therefore the conclusions cannot be extrapolated to the entire population of Slovenian multinational companies. Next, we have assumed that within the category ‘market-based transfer prices’ the possibility of transfer pricing manipulation still existed. Both prevailing market prices as well as adjusted market prices were included in this category. We assumed that adjusted market prices allowed for a range of transfer prices to be used to accomplish diverse (especially tax- related) goals. For this reason we assigned the companies to two groups as follows: companies using prevailing market prices were assigned to group 1 while companies using all other transfer prices (cost-based prices, adjusted market prices and other prices) were assigned to group 2. The analysis of the results (Tables 3 and 4) show that those companies, using prevailing market prices, had, on average, higher revenues (on average SIT 31,553,658,000) than companies using other transfer prices (on average SIT 15,294,136,000). Further, companies in group 1 had, on average, a higher value of assets (on average SIT 27,315,980,000) than the companies in group 2 (on average SIT 14,401,668,000). Table 3: Influence of size on transfer pricing (criterion: revenues) – adjusted groups N Mean (total revenues in Std. Deviation Std. Error Mean 1.000 SIT) Prevailing market price 37 31.553.657,59 52.948.906,31 8.704.746,58 Other bases 47 15.294.136,38 20.640.669,16 3.010.751,03 Total revenues (1.000 SIT) Equal variances Equal variances not assumed assumed Levene's Test for F 13,915 Equality of Variances Sig. 0,000 9
  • 10. t-test for Equality of T -1,930 -1,765 Means Df 82 44,629 Sig. (2-tailed) 0,057 0,084 Mean Difference -16.259.521,21 -16.259.521,21 Std. Error Difference 8.426.064,862 9.210.713,042 95 % Confidence Interval Lower -33.021.648,405 -34.815.110,853 95 % Confidence Interval Upper 502.605,982 2.296.068,430 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. 10
  • 11. Table 4: Influence of size on transfer pricing (criterion: value of assets) – adjusted groups N Mean (value of Std. Deviation Std. Error Mean assets in 1.000 SIT) Prevailing market price 37 27.315.979,76 37.200.215,48 6.115.677,75 Other bases 47 14.401.667,55 15.952.015,64 2.326.840,63 Value of assets (1.000 SIT) Equal variances Equal variances not assumed assumed Levene's Test for F 18,339 Equality of Variances Sig. 0,000 t-test for Equality of T -2,145 -1,974 Means Df 82 46,416 Sig. (2-tailed) 0,035 0,054 Mean Difference -12.914.312,20 -12.914.312,20 Std. Error Difference 6.020.135,016 6.543.370,819 95 % Confidence Interval Lower -24.890.278,507 -6.082.251,323 95 % Confidence Interval Upper -938.345,900 253.626,915 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. The differences between the two groups increased by applying the new criterion. In addition the t-test revealed statistically significant differences (in the case of revenues, the significance level was 0.03, in the case of the value of assets the significance level was 0.02). The results confirm that the larger the multinational company, the more likely it is that it will use prevailing market price as its transfer pricing strategy. This finding can be generalized to the entire population of Slovenian multinational companies. Hypothesis 2: The more unstable the environment of its subsidiary, the less likely it is that multinationals will use market-based transfer pricing strategies. The second hypothesis studies the influence of stability within the environment in which the subsidiary operates on transfer pricing policy. We believe that political factors (such as the possibility of expropriation, of civil wars or political turmoil) as well as social factors (such as class conflicts) related to the subsidiary's host country may influence the transfer pricing strategy of a multinational company. Companies that use one of the market-based transfer pricing systems were assigned to group 1. Those companies that establish their transfer prices on other bases were assigned to group 2. The interviewees were asked the following question: ‘How do you perceive the 11
  • 12. environment of your foreign subsidiary (1 = very unstable environment, 5 = very stable environment)?’ According to the hypothesis we assumed that companies from group 1 perceive the environments of their foreign subsidiaries to be more stable than companies from group 2 (Table 5). Again, the allocation of companies into the two groups following the criteria ‘market-non market’ turned out not to be appropriate. Therefore, we assigned the companies to two groups as follows: companies using prevailing market prices were assigned to group 1 while companies using all other transfer prices (cost-based prices, adjusted market prices and other prices) were assigned to group 2. Table 5: Influence of stability of foreign subsidiary's environment on transfer pricing N Mean (business Std. Deviation Std. Error Mean environment stability) Market-based 57 2,89 1,097 0,145 Non-market based 27 2,93 0,958 0,184 Business environment stability Equal variances Equal variances not assumed assumed Levene's Test for F 1,431 Equality of Variances Sig. 0,235 t-test for Equality of T -0,127 -0,133 Means Df 82 57,951 Sig. (2-tailed) 0,900 0,895 Mean Difference -0,03 -0,03 Std. Error Difference 0,246 0,235 95 % Confidence Interval Lower -0,521 -0,501 95 % Confidence Interval Upper 0,459 0,439 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. The analysis of the results indicates that companies with foreign subsidiaries in more stable environments more frequently use prevailing market prices for their international transfers whereas companies with foreign subsidiaries in more unstable environments more frequently use other bases to determine their transfer prices. However, the differences between the two groups were small and not statistically significant (similar to the findings of Al-Eryani et al., 1996). Any conclusion related to the influence of stability within the business environment of foreign subsidiaries on the transfer pricing system thus cannot be generalized to the entire population of Slovenian multinational companies. 12
  • 13. Hypothesis 3: In companies where a system other than a market-based transfer pricing system is used, the effects of uncontrollable transfer prices are eliminated from the performance evaluation of foreign subsidiaries’ managers. The third hypothesis focuses on the controllability principle in the transfer pricing context. According to this principle only those internal transfer-related costs and revenues controllable by the manager of the subsidiary should be considered in the performance evaluation process. To find out to what extent Slovenian parent companies use this principle, we examined the available data to find out whether in those companies, where a system other than market prices is used to evaluate internal transfers, there is a mechanism for eliminating the influences of such prices from performance evaluations. The respondents were asked how the influences of the transfer pricing system were eliminated from performance evaluation. The following answers were proposed: 1) we keep two sets of books, one for tax purposes and one for management (including control) purposes; 2) we include adjustments in budgets so that managers are not evaluated on the effect of the transfer pricing strategy; 3) regarding transfer prices we try to approximate market conditions; and 4) transfer pricing policy is disregarded in the performance evaluation process (Table 6). Table 6: Measures used to counter effects of transfer pricing on performance evaluation Keeping two Disregarding Including Approximating sets of books transfer pricing adjustments in market Total effects budgets conditions Variable cost pricing method 1 2 3 Total cost pricing method 2 1 2 5 Cost-plus method 3 3 2 8 Other transfer pricing methods 2 2 5 2 11 Total 2 8 11 6 27 Source: Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, 2003. Only those companies that set their transfer prices on bases other than market prices were analyzed. In companies where market-based transfer prices are used, the need to eliminate the influences of the transfer pricing system is less explicit. In the sample, there were 27 such companies. Most frequently, companies eliminate the transfer pricing influences by including adjustments in budgets so that managers are not evaluated on the effect of the transfer pricing strategy (11 13
  • 14. companies). If performance is evaluated on the basis of achieving the budgeted results, a manager whose company is achieving poor business results due to priority business goals set out in the budgeting process can also receive a good performance evaluation if the budgeted results are achieved. The second group of companies tries to approximate market conditions (6 companies). In most cases these companies cannot use one of the market-based transfer prices because a comparable external market for their (semi)products does not exist. The last method that successfully eliminates the effects of transfer pricing on performance evaluation is the use of two sets of books. In US companies, the field of the methods used to eliminate the influence of transfer pricing on performance evaluation was researched by S. Borkowski (1992). The results of her research showed that already in 1992 most US large multinational companies (65.8%) were using two sets of books, where transfer prices are set independently for tax purposes and for internal demands (such as investment/disinvestment decisions and performance evaluation purposes). Such a system is only used by two companies in our sample. Compared to the results of the American research, this result is very surprising. The reasons for such differences can be attributed to the fact that Slovenian companies differ from US companies for two principal reasons: 1) due to high costs related to maintaining two sets of books, one for tax purposes and one for management purposes, the cost/benefit analysis allows for the use of such a method only in the largest companies where the highest benefits are expected (companies in our sample were, on average, much smaller than the companies in the research carried out among US companies); and 2) while the processes of preparing financial and tax statements are highly interdependent in Slovenia, they are more independent in the USA. Therefore, the preparation of two sets of books is (administratively) more feasible in the USA than in Slovenia. Among all companies that set transfer prices on cost bases or use negotiated transfer prices, there are only eight companies that disregard the transfer pricing policy in the performance evaluation process. 5. Conclusion 14
  • 15. In this paper we have studied size and business environment stability as transfer pricing determinants of Slovenian multinational companies. The results are based on a survey we carried out in 2003 among medium-sized and large Slovenian companies with at least one foreign subsidiary. Using revenues and the total value of assets as criteria of the company’s size, we confirmed that the larger the multinational company the more likely it is that it will use a market-based transfer pricing strategy. We believe this can be partly explained by the fact that bigger companies have an above-average tax audit exposure. Some comparable researches indicate that political factors (such as the possibility of expropriation, civil wars or political turmoil) as well as social factors (such as class conflicts) related to the subsidiary's host country influence the transfer pricing strategy of a multinational company. Any conclusion related to the influence of stability within the business environment of foreign subsidiaries on the transfer pricing system cannot be extrapolated to the entire population of Slovenian multinational companies. As opposed to the United States where already more than 10 years ago two-thirds of large multinational companies were implementing a parallel transfer pricing system, there were only two such companies in our sample. This result is not surprising for two reasons. First, the US companies in the sample were much larger than the companies in our survey and, second, while the processes of preparing financial and tax statements are highly interdependent in Slovenia they are more independent in the USA. For this reason, the preparation of two sets of books is (administratively) more feasible in the USA. Regarding the controllability principle related to transfer pricing in the performance evaluation process, the results indicate that Slovenian companies follow theoretical recommendations. In most cases this is done by already considering transfer pricing goals in the budgeting process. References 1. Al-Eryani, M.F., Alam, P. and Akhter, S.H. (1996) Transfer Pricing Determinants of US Multinationals. Readings in International Accounting Blake, J. and Hossain, M. (eds.), pp. 247-264, International Thomson Business Press, London. 15
  • 16. 2. Anctil, R.M. and Dutta, S. (1999) Negotiated Transfer Pricing and Divisional Performance Evaluation, The Accounting Review, 74(1), 87-104. 3. Arpan, J.S. (1972) International Intracorporate Pricing, Praeger, New York. 4. Banka Slovenije (2002) Neposredne naložbe (Direct Investment) 1994-2001, Banka Slovenije, Ljubljana. 5. Benvignati, A.M. (1985) An Empirical Investigation of International Transfer Pricing by US Manufacturing Firms. Multinationals and Transfer Pricing, Rugman, A.M. and Eden, L. (eds.), pp. 193-211, Croom Helm, London. 6. Borkowski, S.C. (1992) Organizational and International Factors Affecting Multinational Transfer Pricing, Advances in International Accounting, 5(1), 173-192. 7. Chan, K.H., Chow, L. (2001) Corporate environments and international transfer pricing – an empirical study of China in a developing economy framework, Accounting and Business Research, 31(2), 103-118. 8. Chan, K.H., Lo, A.W.Y. (2004) The influence of management perception of environmental variables on the choice of international transfer-pricing methods, The International Journal of Accounting, 39(1), 93-112. 9. Eccles, R.G. and White, H.C. (1988) Price and Authority in Inter-Profit Center Transactions. Organizations and Institutions - Sociological and Economic Approaches to the Analysis of Social Structure, Winship, C. and Rosen, S., (eds.), a supplement to American Journal of Sociology, 94, 17-51. 10. Ernst & Young (2004) Transfer Pricing 2003 Global Survey: Practices, Perceptions and Trends in 22 Countries and Tax Authority Approaches in 44 Countries, The International Tax Journal, 30(3), 1-87. 11. Hočevar, M. and Zaman, M. (1999) Problem določanja prenosnih cen, Revizor, 10(12), 34-44. 12. Mehafdi, M. (2000) The ethics of international transfer pricing, Journal of Business Ethics, 28(4), 365-382. 13. Miesel, V.H., Higinbotham, H.H. and Yi, C.W. (2003) International Transfer Pricing - Practical Solutions for Intercompany Pricing, The International Tax Journal, 28(4), 1-22. 14. OECD (2001) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, Paris. 16
  • 17. 15. Survey on the role of financial and non-financial performance evaluation measures for management control over foreign subsidiaries, Faculty of Economics, Ljubljana, 2003. 16. Shulman, J. (1969) Transfer pricing in multinational firms, European Business, 15(1), 46-54. 17. Slovenian Companies Act (Uradni list RS, nos. 30/93, 29/94, 82/94, 20/98, 84/98, 6/99, 45/01). 17