TRANSFER PRICING AGGRESSIVENESS AND FINANCIAL DERIVATIVES PRACTICES: EMPIRICAL EVIDENCES FROM UNITED KINGDOM

Ricardo Santos (), Samuel Pereira () and Elísio Brandão ()
Additional contact information
Ricardo Santos: SONAE
Samuel Pereira: Faculdade de Economia do Porto
Elísio Brandão: Faculdade de Economia do Porto

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: Multinational corporations (MNCs) have long taking consideration into transfer pricing as a critical aspect of their tax management policies. The present study aims to identify the influence of intra-group financing using derivatives instruments on transfer pricing aggressiveness. Based on a selective sample of 117 publicly listed U.K. multinational enterprises over 2006 and 2014 (1053 firms years observations), the regression model indicates derivatives to be significantly associated with transfer pricing aggressiveness behaviors. More specifically, interest rates and foreign exchange rates volatility have a positive contribution on magnifying international transfer pricing aggressiveness. Additionally, the multinationality of MNCs also exhibits a significant impact on entities tax governance. The overall empirical findings present reasonable results augmented by an additional analysis with recourse to effective tax measures.

Keywords: Transfer Pricing; Derivative Instruments; Multinationality; Aggressiveness and Tax Avoidance (search for similar items in EconPapers)
JEL-codes: G31 H21 H26 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2016-11
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.fep.up.pt/investigacao/workingpapers/wp583.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.fep.up.pt/investigacao/workingpapers/wp583.pdf [302 Found]--> https://fep.up.pt/investigacao/workingpapers/wp583.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:583

Access Statistics for this paper

More papers in FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto Contact information at EDIRC.
Bibliographic data for series maintained by ().