Current Trends and Corporate Cases in Transfer Pricing

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.

Facts, findings, and interpretations of a comprehensive study of corporate transfer pricing policies and practices, built on responses from 95 Fortune 1000 firms.

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About 40 percent of U.S. international trade and 20 percent of world trade is intrafirm trade governed by transfer pricing. Tang (accounting, Western Michigan U.) presents a report on corporate transfer pricing practices based on the results of a questionnaire survey of 95 Fortune 1000 companies and a case study of the multinationals Whirlpool, Dow Chemical, Guidant Corporation, Masco, and Eaton. The three most important variables governing international transfer pricing are found to be tax regulations of the U.S., tax regulations of foreign countries, and overall profit to the company. Income or profit in comparison with budget is found to be the most important financial measure for group or divisional performance within companies. For the five multinational cases, corporate mission and strategies, transfer pricing, and performance practices are evaluated and related to results from the questionnaire. Annotation c. Book News, Inc., Portland, OR (booknews.com)

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).