An empirical study of voluntary transfer pricing disclosures in China
Document Type
Journal article
Source Publication
Journal of Accounting and Public Policy
Publication Date
11-1-2011
Volume
30
Issue
6
First Page
607
Last Page
628
Publisher
Elsevier Inc.
Abstract
This paper empirically investigates the factors that affect the management's voluntary disclosures of the transfer pricing details of related-party transactions. Using Chinese data from 2004 and 2005, we hypothesize and find that firms that make voluntary disclosures of the pricing methods of related-party transactions are negatively associated with (i) a higher level of earnings management (as captured by abnormal related-party transactions) and (ii) its underlying incentives (as captured by the management's performance-linked bonuses and the firm's incentives to achieve earnings targets); further, they are positively associated with (i) a higher percentage of independent directors and (ii) a higher percentage of government ownership. Overall, our findings suggest that earnings management and its incentives, board composition, and ownership structure significantly influence the voluntary disclosure decisions of managers.
DOI
10.1016/j.jaccpubpol.2011.08.005
Print ISSN
02784254
E-ISSN
18732070
Publisher Statement
Copyright © 2011 Elsevier Inc
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Lo, A. W. Y., & Wong, R. M. K. (2011). An empirical study of voluntary transfer pricing disclosures in China. Journal of Accounting & Public Policy, 30(6), 607-628. doi: 10.1016/j.jaccpubpol.2011.08.005