Transfer Pricing Decisions in U.S. Multinational Corporations

Abstract

This paper provides information about the effect 14 variables have on transfer pricing decisions on 62 MNCs. Questionnaire data is factor analyzed and evaluated to determine whether significant differences exist when respondents are grouped alternately into five dichotomous categories: (1) those assessed compared with those not assessed additional U.S. federal income taxes because of transfer pricing methods, (2) those among the first 150 compared with those among the remaining 500 largest U.S. industrial firms, (3) those whose export sales exceed $25 million compared with those whose export sales do not, (4) those whose export sales to subsidiaries exceed 50 percent of total exports compared with those whose export sales to subsidiaries do not, and (5) those unable to use a market-based transfer price compared with those who are able to do so. By means of Student's t-test and .10 level of significance, it is determined that some variables and factors do have greater influence on transfer pricing decisions for some types of companies.