Week Four Research Paper – List Of Potential Topics ✓ Solved
Week Four Research Paper – List of potential research topics
To complete the Article Research Paper, select a topic from the list below or from the chapter readings. Potential topics include: The benefits of a free enterprise system; Capitalism and free trade as foundations for freedom from poverty; Voluntary transactions create wealth by moving assets from lower- to higher-valued uses; Impediments to movement of assets (taxes, subsidies, price controls) destroy wealth; Opportunity of inefficiencies; Art of business is finding lower-valued assets and moving to higher-valued uses; A company as a series of transactions; Costs and opportunity cost; Relevant costs and benefits; Accounting profit vs economic profit; Incentive compensation links pay to performance; Investment trade-offs between current sacrifice and future gain; Discount rates and cost of capital; Net Present Value; Sunk costs; Post-investment hold-up; Price elasticity of demand; Law of diminishing marginal returns; Increasing returns to scale; Economies and diseconomies of scale; Learning curves; Market equilibrium; Competitive industry; Mean reversion; Compensating wage differentials; Monopoly; Industrial organization and Five Forces; Resource-based view; Strategies: cost reduction, differentiation, reducing competition intensity; Foreign exchange market and devaluations; Psychological biases in pricing; Price discrimination and arbitrage; Game theory topics (common-value auction, winner's curse, moral hazard); Transfer Pricing.
Assignment Requirements: i. Choose a research topic from the chapter readings or provided list. ii. Research and find a minimum of four peer-reviewed articles relevant to the topic (preferably within last five years). iii. Write a four to five page double-spaced paper in APA format discussing the findings in your own words (paper length excludes cover page, abstract, references). iv. Structure the paper with: a. Cover page; b. Overview describing the importance of the research topic to current business and professional practice; c. Purpose of Research reflecting potential benefit to practice and the literature; d. Review of the Literature summarizing main points and findings of each selected article with appropriate citations; e. Practical Application describing how findings can shape and improve current business and professional practice; f. Conclusion; g. References formatted in APA style.
Paper For Above Instructions
Transfer Pricing: Overview and Relevance to Contemporary Business
Overview
Transfer pricing—the prices charged for transactions between related entities of multinational enterprises (MNEs)—is central to firm strategy, tax policy, and international commerce. Transfer pricing affects profit allocation, tax liabilities, competitive behavior, and location decisions for intangible assets and production (Grubert & Mutti, 1991; Dischinger & Riedel, 2011). In an era of digitization and intangible-intensive business models, accurate transfer pricing governance is critical both for corporate risk management and for national tax authorities seeking fair tax bases (Tørsløv, Wier, & Zucman, 2022).
Purpose of Research
This paper synthesizes peer-reviewed research on transfer pricing to inform managers, tax professionals, and policymakers. The objective is to summarize empirical findings on why firms shift profits across borders, to highlight the role of intangibles and ownership structures, and to extract practical recommendations for corporate transfer pricing policies and regulatory responses. Understanding these dynamics enables firms to manage compliance risk while optimizing global value chain design, and enables policymakers to better target anti-avoidance measures (Clausing, 2003; Huizinga & Laeven, 2008).
Review of the Literature
Empirical Evidence of Tax-Motivated Price Setting
Clausing (2003) provides seminal evidence that intra-firm prices are responsive to tax differentials: U.S. firms appear to set transfer prices to shift profits to lower-tax jurisdictions, leading to measurable reductions in U.S. tax revenues. This study uses trade-price data and establishes a clear empirical link between tax incentives and transfers of reported profits (Clausing, 2003).
Taxes, Tariffs, and Production Location
Grubert and Mutti (1991) examine how taxes and tariffs jointly influence MNE decisions, showing that transfer pricing interacts with production and shipment choices. Their model and evidence indicate that internal pricing responds to border taxes, shaping real activity and reported profits (Grubert & Mutti, 1991).
Multi-Country Perspectives on Profit Shifting
Huizinga and Laeven (2008) extend analysis across multiple countries, demonstrating consistent patterns of profit shifting and the importance of parent and affiliate ownership structures. Their findings emphasize that both tax rates and the institutional setting affect the extent of shifting (Huizinga & Laeven, 2008).
Ownership, Intangibles, and Transfer Pricing
Dischinger and Riedel (2011) and Cristea and Nguyen (2016) analyze how ownership of intangibles and foreign affiliates influences where profits are booked. Cristea and Nguyen (2016) use firm-level data to show that foreign ownership links and contractual arrangements materially shape transfer pricing outcomes, particularly for intangible-rich industries.
Macro Estimates of Profit Misallocation
Tørsløv, Wier, and Zucman (2022) quantify the magnitude of missing profits worldwide, attributing large shares to profit shifting and tax avoidance strategies including transfer pricing. Their country-level estimates provide policymakers with the scale of the problem and underscore the need for multilateral solutions.
Critical and Policy Perspectives
Sikka and Willmott (2010) critique how transfer pricing can be used for aggressive tax avoidance and distort financial reporting. The OECD Transfer Pricing Guidelines (2017) and analytical work by Eden (1998) present normative frameworks and policy responses intended to balance arm's-length principles with modern business realities.
Practical Application
Corporate practitioners should adopt robust transfer pricing documentation, align functional and risk analyses with observable market comparables, and maintain contemporaneous evidence supporting pricing decisions (OECD, 2017). For firms with substantial intangible assets, centralized IP ownership or licensing arrangements must be justified economically and documented to withstand scrutiny (Dischinger & Riedel, 2011; Cristea & Nguyen, 2016). Tax risk management should integrate scenario analysis of audit exposures across major jurisdictions and contingency planning for changes in international rules (Tørsløv et al., 2022).
Policymakers should continue to pursue multilateral solutions, such as BEPS Action Plan follow-ups and profit allocation rules that reflect where value is created. Empirical studies suggest targeted anti-avoidance measures—like controlled foreign company (CFC) rules, tougher documentation requirements, and minimum effective tax rates—can reduce profit shifting without unduly harming investment (Huizinga & Laeven, 2008; Clausing, 2003).
Conclusion
Transfer pricing remains a key junction between firm strategy and tax policy. Empirical research consistently demonstrates tax-motivated profit shifting, especially where intangible assets, ownership structures, and jurisdictional tax differentials exist. Firms must deploy rigorous transfer pricing policies and documentation; regulators should continue multilateral cooperation to protect tax bases while preserving cross-border commerce. Integrating empirical findings into corporate practice and public policy will reduce mispricing incentives and improve the transparency and fairness of the international tax system.
References
- Clausing, K. A. (2003). Tax-motivated transfer pricing and US intrafirm trade prices. Journal of Public Economics, 87(9-10), 2207–2223.
- Cristea, A. D., & Nguyen, D. X. (2016). Transfer pricing by multinational firms: New evidence from foreign firm ownership. American Economic Journal: Economic Policy, 8(3), 170–202.
- Dischinger, H., & Riedel, N. (2011). Corporate taxes and the location of intangible assets within multinational firms. Journal of Public Economics, 95(7-8), 691–707.
- Eden, L. (1998). Taxing Multinationals: Transfer Pricing and Corporate Income Shifting. Brookings Institution Press.
- Grubert, H., & Mutti, J. (1991). Taxes, tariffs and transfer pricing in multinational corporate decision making. Review of Economics and Statistics, 73(2), 285–293.
- Huizinga, H., & Laeven, L. (2008). International profit shifting within multinationals: A multi-country perspective. Journal of Public Economics, 92(5-6), 1164–1182.
- OECD. (2017). OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. OECD Publishing.
- Sikka, P., & Willmott, H. (2010). The dark side of transfer pricing: Its role in tax avoidance and the misrepresentation of corporate profits. Critical Perspectives on Accounting, 21(4), 342–356.
- Tørsløv, T. R., Wier, L., & Zucman, G. (2022). The missing profits of nations. Quarterly Journal of Economics, 137(2), 293–345.
- Hines, J. R., & Rice, E. M. (1994). Fiscal paradise: Foreign tax havens and American business. Quarterly Journal of Economics, 109(1), 149–182.