Transfer prices: A financial perspective

Nilufer Usmen

Research output: Contribution to journalArticlepeer-review

11 Scopus citations


The arguments for and against transfer pricing schemes so far have focused on profit-seeking approaches based on tax differentials, or on evasion of government enforced goods and fund flow restrictions. This article shifts to a value-seeking framework where transfer prices act as strategic tools that may enhance value for the multinational with a foreign affiliate by exploiting financial and/or tax arbitrage that also lead to ownership arbitrage. The results show that there is an optimal level of transfer price depending on the specific exchange rate distribution when the cost structure allows for a penalty for overcharging. Moreover, this article introduces a new form of tax arbitrage benefit of transfer prices that is based on present value of tax shields.

Original languageEnglish
Pages (from-to)1-22
Number of pages22
JournalJournal of International Financial Management and Accounting
Issue number1
StatePublished - Mar 2012


Dive into the research topics of 'Transfer prices: A financial perspective'. Together they form a unique fingerprint.

Cite this