Shaif Jarallah and Yoshio Kanazaki
This research surveys the recent surge of empirical studies on transfer pricing manipulation by multinational enterprises (MNEs), tax-motivated transfer pricing, particularly from…
Abstract
This research surveys the recent surge of empirical studies on transfer pricing manipulation by multinational enterprises (MNEs), tax-motivated transfer pricing, particularly from the year 1990 to present. The review tackles transfer pricing income shifting behavior of MNEs from three different perspectives: taxation relationship with profitability, intrafirm trade, and foreign direct investment (FDI). There have been significant developments and contributions in this field, despite many limitations, mainly concerning the availability of micro-data in general, (specifically intrafirm trade data which allows capturing much of the heterogeneity which is dangling within inter-sectors), and the tax measurement issue. Yet, this area of study is still developing and promises more achievements.
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Rongrong Zhang and Yoshio Kanazaki
The purpose of this paper is to test static tradeoff against pecking order models of capital structure in Japanese firms.
Abstract
Purpose
The purpose of this paper is to test static tradeoff against pecking order models of capital structure in Japanese firms.
Design/methodology/approach
The static tradeoff and pecking order models are tested on a sample of 1,325 non‐financial Japanese firms between 2002 and 2006.
Findings
Empirical results prove that both models can explain some part of the capital structure. The static tradeoff model shows that firm leverage is affected by several determinants, and the pecking order model displays similar movements between net debt retired and financial surplus. However, both models have shortcomings. The static tradeoff model fails to explain the negative correlation between profitability and firm leverage, and the pecking order model fails to explain the low deficit coefficient.
Originality/value
The paper, because of the inconsistent results in prior studies, tests static tradeoff against pecking order models, with the data of Japanese firms.