Company Transfer Pricing Decision: An Empirical Study on Manufacturing Companies Listed in Indonesian Stock Exchange

Abstract

This research aims to analyze the factors are affecting to transfer pricing applied decision. The factors are tax (TAX), bonus mechanisms (BM), tunneling incentive (TI), debt covenant (DC) and exchange rate (ER). Data was collected through purposive sampling method from 22 companies that conducted transactions with related parties in the manufacturing sector, listed on the IDX, within the 2013-2017, in the form secondary data, through companies’ year- end financial report. However, hypothesis testing was carried out using a logistic regression method.

The result indicated that TAX, DC and ER significantly influence the decision to implement TP, while BM and TI had an insignificant effect.