The Moderating Role of Political Connection on the Relation between Transfer Pricing and Effective Tax Rate

  • 程 廣育

Student thesis: Master's Thesis


The study investigates the effects of transfer pricing on firms’ effective tax rates and whether having a financial-economic political connections further moderates this relationship Firms’ use of transfer pricing to avoid tax has long been an issue for the governments this done by shifting the income to low taxation areas Using data for Taiwanese firms from 2011 to 2013 the results show that firms in Taiwan use transfer pricing to have a lower effective tax rate This result is consistent with theoretical expectations and prior research Furthermore this study explores whether a financial-economic political connection through the board use transfer pricing as a tool to achieve a lower tax rate but did not find enough evidence to show that firms use transfer pricing through this kind of political connection or any other levels of political connections However the results show that in general firms with political connections also have a lower effective tax rate This is accordance with recent studies on two other Asian countries: Malaysia and China
Date of Award2015 Jul 6
Original languageEnglish
SupervisorChaur-Shiuh Young (Supervisor)

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