Corporate environments and international transfer pricing : an empirical study of China in a developing economy framework

Koon Hung CHAN, Lynne CHOW

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

6 Citations (Scopus)

Abstract

This paper investigates the international transfer pricing methods adopted by multinational corporations (MNCs) in China and how their choices are affected by specific corporate attributes in the context of the business environment in China. Empirical test results based on structured interviews indicate that MNCs having a local (Chinese) partner in management tend to adopt market-based transfer pricing methods. The influence of local partners on the choice of transfer pricing methods is modified by the impact of the source of foreign investment, as US-sourced MNCs are more likely to use cost-based pricing methods for international transfers. The influences of these 2 variables on the choice of transfer pricing methods are significant both directly and indirectly. There is also some evidence that export-oriented enterprises are more likely to adopt cost-based transfer pricing than those aiming at China's domestic markets.
Original languageEnglish
Pages (from-to)103-118
Number of pages16
JournalAccounting and Business Research
Volume31
Issue number2
DOIs
Publication statusPublished - 1 Jan 2001

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Transfer pricing
Empirical study
China
Developing economies
International transfers
Multinational corporations
Costs
Empirical test
Domestic market
Pricing
Business environment
Foreign investment
Structured interview

Cite this

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abstract = "This paper investigates the international transfer pricing methods adopted by multinational corporations (MNCs) in China and how their choices are affected by specific corporate attributes in the context of the business environment in China. Empirical test results based on structured interviews indicate that MNCs having a local (Chinese) partner in management tend to adopt market-based transfer pricing methods. The influence of local partners on the choice of transfer pricing methods is modified by the impact of the source of foreign investment, as US-sourced MNCs are more likely to use cost-based pricing methods for international transfers. The influences of these 2 variables on the choice of transfer pricing methods are significant both directly and indirectly. There is also some evidence that export-oriented enterprises are more likely to adopt cost-based transfer pricing than those aiming at China's domestic markets.",
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Corporate environments and international transfer pricing : an empirical study of China in a developing economy framework. / CHAN, Koon Hung; CHOW, Lynne.

In: Accounting and Business Research, Vol. 31, No. 2, 01.01.2001, p. 103-118.

Research output: Journal PublicationsJournal Article (refereed)Researchpeer-review

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