Managerial autonomy and tax compliance : an empirical study on international transfer pricing
Document Type
Journal article
Source Publication
Journal of the American Taxation Association
Publication Date
Fall 1-1-2006
Volume
28
Issue
2
First Page
1
Last Page
22
Abstract
This paper examines the impact of managerial autonomy on tax compliance in an international transfer pricing context. Specifically, we study whether foreign subsidiaries' autonomy in making pricing and sourcing decisions on intrafirm transfers affect their profit shifting through international transfer pricing. We measure transfer pricing noncompliance in terms of tax audit adjustments made by tax authorities. Based on a sample of 163 transfer pricing audits on foreign investment enterprises (FIEs) in China, we find that tax audit adjustments for FIEs that have autonomy in setting transfer prices or sourcing from outsiders are smaller than those that have their transfer transactions dictated by parent companies.
DOI
10.2308/jata.2006.28.2.1
Print ISSN
01989073
E-ISSN
15588017
Publisher Statement
Copyright © 2006 American Accounting Association
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Chan, K. H., Lo, A. W. Y., & Mo, P. L. L. (2006). Managerial autonomy and tax compliance: An empirical study on international transfer pricing. Journal of the American Taxation Association, 28(2), 1-22. doi: 10.2308/jata.2006.28.2.1