Can the Integration of a Tax Compliant Transfer Pricing System Into the Management Control System Be Successful? Yes, It Can!

Journal of Accounting and Organizaional Change, Forthcoming

50 Pages Posted: 3 May 2016 Last revised: 17 Apr 2018

See all articles by Katrin Hummel

Katrin Hummel

WU Vienna University of Economics and Business

Dieter Pfaff

University of Zurich

Benedikt Bisig

University of Zurich - Department of Business Administration

Date Written: April 3, 2018

Abstract

This paper examines how the integration of a single-book tax compliant transfer pricing system into the management control system is related to the perceived success of that transfer pricing system. To identify the relationships, we use results from survey data from Swiss multinational firms with cross-border internal transactions. Whereas analytical research suggests a decoupling of transfer prices to attain both tax compliance and internal (control) purposes, we find that the integration of a tax compliant transfer pricing system into the management control system is perceived to be successful in achieving these goals. This is particularly true when the transfer pricing system is transparent and can be revised in the case of fundamental management control problems. Corroborating these findings, we also find affirmative testimonies from interview data from employees within three multinational enterprises. Overall, our results are consistent with survey-based findings reporting that firms predominantly use the same transfer price for both tax compliance and management control purposes.

Keywords: transfer pricing system integration, enabling use, transfer pricing system success, survey and interview data

Suggested Citation

Hummel, Katrin and Pfaff, Dieter and Bisig, Benedikt, Can the Integration of a Tax Compliant Transfer Pricing System Into the Management Control System Be Successful? Yes, It Can! (April 3, 2018). Journal of Accounting and Organizaional Change, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2773512 or http://dx.doi.org/10.2139/ssrn.2773512

Katrin Hummel (Contact Author)

WU Vienna University of Economics and Business ( email )

Welthandelsplatz 1
Vienna, 1020
Austria

Dieter Pfaff

University of Zurich ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

Benedikt Bisig

University of Zurich - Department of Business Administration ( email )

Rämistrasse 71
Zurich, CH-8006
Switzerland

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