Transfer Pricing, Social Factors and Financial Performance
of Universal Companies in Nigeria

Osho; Augustine E Ph.D; Ogedengbe; Fausat Folake

doi:https://doi.org/10.56201/ijefm.v7.no5.2022.pg81.98

📄 Download Paper

Transfer Pricing, Social Factors and Financial Performance of Universal Companies in Nigeria

Osho, Augustine E Ph.D & Ogedengbe, Fausat Folake

Abstract

Research into transfer pricing and the variables influencing its prevalence and scope in a setting such as Nigeria, a developing country, is fascinating. Understanding these elements is crucial for regulatory agencies in Nigeria or other developing nations to effectively monitor businesses and their transfer pricing operations. This study then examined transfer pricing, social factors and financial performance of universal companies in Nigeria. The study was predicated on agency theory to assess the conflict of interest that arises amidst the investors and executives over the practice of transfer pricing. Eighteen (18) listed universal companies were sampled. Panel regression technique was used to analyse the hypothesis to arrive at interpretable findings. The independent variables were board size, board independence and related party transactions while the dependent variable was return on assets. The control variables were firm size and leverage. Findings showed only RPT were not significantly associated with financial performance. However, the overall model was significant as revealed by the p-value of 0.000215 which is less than 0.05. It can be concluded that transfer pricing and social factors identified in this study have explanatory power to influence the financial performance of universal companies in Nigeria.As a result, it is recommended that regulators should expand their rules to increase the disclosure of transfer pricing practices by universal listed companies, and to expand controls and monitoring over transfer pricing in companies through improving corporate governance mechanisms, including increasing the power of smaller shareholders and independent board members in approving such transactions.

Keywords

Transfer PricingSocial FactorsRelated Part TransactionsBoard SizeBoard IndependentFirm SizeLeveragePerformance

References

Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of Financial Economics, (94), 291–309. Agusto, G., Puspa, D. F. & Rifa, D. (2018). Effects of taxes, bonus mechanisms, and good corporate governance against indications for transfer pricing. Journal of the Faculty of Economics. 12 (1), 1-2. Akinola, A. O & Efuntade, A. O. (2021). International accounting standards board conceptual framework: A Brief Review. Modern Perspectives in Economics, Business and Management,7. United Kingdom: Book Publisher International. Akinola, A. O, Adegoke, K. O, Efuntade, O. O & Efuntade, A. O. (2021).Investigating corporate performance of fast moving consumer goods companies before and after the adoption of IFRS in Nigeria. International Journal of Accounting and Financial Management,7(1), 11-25 Akinola, A. O, Efuntade, O. O & Efuntade, A. O. (2020).Banks financing and industrial sector performance in Nigeria.International Journal of Accounting, Finance and Risk Management, 5(3), 157-166. Akinwunmi, A. A., & Akinola, A. O., (2020). Investigating dividends policy and market value of shares in selected quoted deposit money banks in Nigeria. Current Strategies in Economics and Management, 8. United Kingdom: Book Publisher International. Akinyomi, O. J. & Adebayo, O., (2013). Effect of firm size on profitability: Evidence from Nigerian manufacturing sector. Prime Journal of Business Administration and Management (BAM), 3 (9), 1171-1175. Ali, M. (2018), "Determinants and consequences of board size: conditional indirect effects", corporate governance: The International Journal of Business in Society, 18(1), 165- 184. Al-Matari, E., Al-Swidi, A. & Fadzil, F. (2014). Ownership structure characteristics and firm performance: a conceptual study, Journal of Sociological Research,2, 464–493. Anastasia, O. C &Onuora, J. (2019).Effects of related party transactions on financial performance of companies, evidenced by study of listed companies in Nigeria. International Journal of Economics and Financial Management, 4(3), 46-57. Anggraeni, N. & Lutfillah, N. Q. (2019). Determinants of transfer pricing. Journal of Management and Business, 18 (2): 46-55. Archambault, J. J., & Archambault, M. E. (2013). A multinational test of determinants of corporate disclosure. The International Journal of Accounting, 38(2), 173-194.

Transfer Pricing, Social Factors and Financial Performance of Universal Companies in Nigeria

Abstract

Keywords

References

More Articles from INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT