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Transfer pricing from financial and managerial perspectives

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Why is transfer pricing such a significant issue both from a financial and managerial perspective?

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Transfer pricing changes division profits and so division managers make decisions to try to improve those division profits, even if the consolidated organization is not better off. So, from a managerial view, transfer prices alter incentives and may keep division goals from aligning perfectly with organizational goals. From a financial view, when the ...

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Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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