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Title: Managerial autonomy and tax compliance: An empirical study on international transfer pricing
Author(s): Chan, Koon Hung 
Author(s): Lo, A. W. Y.
Mo, P. L. L.
Issue Date: 2006
Publisher: American Accounting Association
Journal: Journal of the American Taxation Association 
Volume: 28
Issue: 2
Start page: 1
End page: 22
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
CIHE Affiliated Publication: No
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