The Unintended Consequences of Headquarters’ Involvement in Decentralized Transfer Price Negotiations: Experimental Evidence

References

• Abdel-Khalik AR, Lusk EJ (1974) Transfer pricing: A synthesis. Accounting Rev. 49(1):8–23.Google Scholar
• Aghion P, Tirole J (1997) Formal and real authority in organizations. J. Political Econom. 105(1):1–29.Crossref, Google Scholar
• Arnold MC, Gillenkirch RM, Hannan RL (2019) The effect of environmental risk on the efficiency of negotiated transfer prices. Contemporary Accounting Res. 36(2):1122–1145.Crossref, Google Scholar
• Avila M, Ronen J (1999) Transfer-pricing mechanisms: An experimental investigation. Internat. J. Indust. Organ. 17(5):689–715.Crossref, Google Scholar
• Babcock L, Loewenstein G, Issacharoff S, Camerer C (1995) Biased judgments of fairness in bargaining. Amer. Econom. Rev. 85(5):1337–1343.Google Scholar
• Baker G, Gibbons R, Murphy JK (1999) Informal authority in organizations. J. Law Econom. Organ. 15(1):56–73.Crossref, Google Scholar
• Bazerman MH, Neale MA (1982) Improving negotiation effectiveness under final offer arbitration: The role of selection and training. J. Appl. Psych. 67(5):543–548.Crossref, Google Scholar
• Block RA, Harper DR (1991) Overconfidence in estimation: Testing the anchoring-and-adjustment hypothesis. Organ. Behav. Human Decision Proc. 49(2):188–207.Crossref, Google Scholar
• Borkowski SC (1990) Environmental and organizational factors affecting transfer pricing: A survey. J. Management Accounting Res. 2(3):79–99.Google Scholar
• Bouwens J, Steens B (2016) Full-cost transfer pricing and cost management. J. Management Accounting Res. 28(3):63–81.Crossref, Google Scholar
• Brown JL, Evans JH, Moser DV (2009) Agency theory and participative budgeting experiments. J. Management Accounting Res. 21(1):317–345.Crossref, Google Scholar
• Carnevale PJ, Pegnetter R (1985) The selection of mediation tactics in public sector disputes: A contingency analysis. J. Soc. Issues 41(2):65–81.Crossref, Google Scholar
• Carnevale PJ, Pruitt DG (1992) Negotiation and mediation. Annual Rev. Psych. 43(1):531–582.Crossref, Google Scholar
• Chang L, Cheng M, Trotman KT (2008) The effect of framing and negotiation partner’s objective on judgments about negotiated transfer prices. Accounting Organ. Soc. 33(7–8):704–717.Crossref, Google Scholar
• Chapman CS (2005) Not because they are new: Developing the contribution of enterprise resource planning systems to management control research. Accounting Organ. Soc. 30(7–8):685–689.Crossref, Google Scholar
• Chapman CS, Kihn LA (2009) Information system integration, enabling control and performance. Accounting Organ. Soc. 34(2):151–169.Crossref, Google Scholar
• Charness G (2000) Responsibility and effort in an experimental labor market. J. Econom. Behav. Organ. 42(3):375–384.Crossref, Google Scholar
• Charness G, Jackson MO (2009) The role of responsibility in strategic risk-taking. J. Econom. Behav. Organ. 69(3):241–247.Crossref, Google Scholar
• Charness G, Cobo-Reyes R, Jiménez N, Lacomba JA, Lagos F (2012) The hidden advantage of delegation: Pareto improvements in a gift exchange game. Amer. Econom. Rev. 102(5):2358–2379.Crossref, Google Scholar
• Coats J, Rankin FW (2016) The delegation of decision rights: An experimental investigation. Adv. Management Accounting 27(1):39–71.Crossref, Google Scholar
• Chen CX, Chen S, Pan F, Wang Y (2015) Determinants and consequences of transfer pricing autonomy: An empirical investigation. J. Management Accounting Res. 27(2):225–259.Crossref, Google Scholar
• Choi J, Hecht GW, Tayler WB (2012) Lost in translation: The effects of incentive compensation on strategy surrogation. Accounting Rev. 87(4):1135–1163.Crossref, Google Scholar
• Dejong DV, Forsythe R, Kim J, Uecker WC (1989) A laboratory investigation of alternative transfer pricing mechanisms. Accounting Organ. Soc. 14(1–2):41–64.Crossref, Google Scholar
• Dikolli SS, Vaysman I (2006) Information technology, organizational design, and transfer pricing. J. Accounting Econom. 41(1–2):201–234.Crossref, Google Scholar
• Dorantes CA, Li C, Peters GF, Richardson VJ (2013) The effect of enterprise systems implementation on the firm information environment. Contemporary Accounting Res. 30(4):1427–1461.Crossref, Google Scholar
• Dorestani A (2007) Transfer price and equilibrium in multidivisional firms: An examination of divisional autonomy and central control. Appl. Econom. 36(17):1899–1906.Crossref, Google Scholar
• Drury C (2004) Management and Cost Accounting, 6th ed. (Thompson, London).Google Scholar
• Dunning D, Meyerowith JA, Holzberg AD (1989) Ambiguity and self-evaluation: The role of idiosyncratic trait definitions in self-serving assessments of ability. J. Personality Soc. Psych. 57(6):1082–1090.Crossref, Google Scholar
• Dunning D, Griffin DW, Milojkovic JD, Ross L (1990) The overconfidence effect in social prediction. J. Personality Soc. Psych. 58(4):568–581.Crossref, Google Scholar
• Eccles RG, White HC (1988) Price authority in inter-profit center transaction. Amer. J. Sociol. 94(Supplement):17–51.Crossref, Google Scholar
• Edlin AS, Reichelstein S (1995) Specific investment under negotiated transfer pricing: An efficiency result. Accounting Rev. 70(2):275–291.Google Scholar
• Elliott WB, Hodge FD, Kennedy JJ, Pronk M (2007) Are M.B.A. students a good proxy for nonprofessional investors? Accounting Rev. 82(1):139–168.Crossref, Google Scholar
• Epley N, Caruso EM, Bazerman MH (2006) When perspective taking increases taking: Reactive egoism in social interaction. J. Personality Soc. Psych. 91(5):872–889.Crossref, Google Scholar
• Farber HS, Bazerman MH (1987) Why is there disagreement in bargaining? Amer. Econom. Rev. 77(2):347–352.Google Scholar
• Fehr E, Herz H, Wilkening T (2013) The lure of authority: Motivation and incentive effects of power. Amer. Econom. Rev. 103(4):1325–1359.Crossref, Google Scholar
• Fischbacher U (2007) z-Tree: Zurich toolbox for ready-made economic experiments. Experiment. Econom. 10(2):171–178.Crossref, Google Scholar
• Fudenberg D, Tirole J (1990) Moral hazard and renegotiation in agency contracts. Econometrica 58(6):1279–1319.Crossref, Google Scholar
• Ghosh D (1994) Intra-firm pricing: Experimental evaluation of alternative mechanisms. J. Management Accounting Res. 6:78–92.Google Scholar
• Gibson K, Thompson L, Bazerman MH (1994) Biases and rationality in the mediation process. Heath L, Bryant F, Edwards J, Henderson E, Myers J, Posavac E, Suarez-Balcazar Y, Tindale RS, eds. Application of Heuristics and Biases to Social Issues, vol. 3 (Plenum Press, New York), pp. 163–183.Crossref, Google Scholar
• Glaser M, Weber M (2007) Why inexperienced investors do not learn: They do not know their past portfolio performance. Finance Res. Lett. 4(4):203–216.Crossref, Google Scholar
• Gloede O, Menkhoff L (2014) Financial professionals’ overconfidence: Is it experience, function, or attitude? Eur. Financial Management 20(2):236–269.Crossref, Google Scholar
• Greenberg PS, Greenberg RH, Mahenthiran S (1994) The impact of control policies on the process and outcomes of negotiated transfer pricing. J. Management Accounting Res. 6(1):93–127.Google Scholar
• Greene W (2010) Testing hypotheses about interaction terms in nonlinear models. Econom. Lett. 107:291–296.Crossref, Google Scholar
• Hackman JR, Lawler EE (1971) Employee reactions to job characteristics. J. Appl. Psych. 55(3):259–286.Crossref, Google Scholar
• Hackman JR, Oldham GR (1976) Motivation through the design of work: Test of a theory. Organ. Behav. Human Performance 16(2):250–279.Crossref, Google Scholar
• Hannan RL, Krishnan L, Newman AH (2008) The effects of disseminating relative performance feedback in tournament and individual performance compensation plans. Accounting Rev. 83(4):893–913.Crossref, Google Scholar
• Hansen DR, Mowen MM (2006) Cost Management: Accounting and Control, 5th ed. (Thompson South Western, Mason, OH).Google Scholar
• Hirshleifer J (1956) On the economics of transfer pricing. J. Bus. 29(3):172–184.Crossref, Google Scholar
• Holmstrom B, Tirole J (1991) Transfer pricing and organizational form. J. Law Econom. Organ. 7(2):211–228.Google Scholar
• Horngren C, Datar S, Rajan M (2012) Cost Accounting: A Managerial Emphasis, 14th ed. (Prentice Hall, Upper Saddle River, NJ).Google Scholar
• Kachelmeier SJ, Towry KL (2002) Negotiated transfer pricing: Is fairness easier said than done? Accounting Rev. 77(3):571–593.Crossref, Google Scholar
• Kaplan RS, Atkinson AA (1998) Advanced Management Accounting, 3rd ed. (Prentice Hall, Upper Saddle River, NJ).Google Scholar
• Kreps DM, Milgrom P, Roberts J, Wilson R (1982) Rational cooperation in the finitely repeated prisoners’ dilemma. J. Econom. Theory 27(2):245–252.Crossref, Google Scholar
• Laffont JJ, Tirole J (1988) The dynamics of incentive contracts. Econometrica 56(5):1153–1175.Crossref, Google Scholar
• Libby R, Rennekamp K (2012) Self-serving attribution bias, overconfidence, and the issuance of management forecasts. J. Accounting Res. 50(1):197–231.Crossref, Google Scholar
• Libby T, Waterhouse JH (1996) Predicting change in management accounting systems. J. Management Accounting Res. 8(1):137–150.Google Scholar
• Luft JL, Libby R (1997) Profit comparisons, market prices and managers’ judgments about negotiated transfer prices. Accounting Rev. 72(2):217–229.Google Scholar
• Magenau JM (1983) The impact of alternative impasse procedures on bargaining: A laboratory experiment. Indust. Labor Relations Rev. 36(3):361–377.Crossref, Google Scholar
• Malmendier U, Tate G (2005) CEO overconfidence and corporate investment. J. Finance 60(6):2661–2700.Crossref, Google Scholar
• Mata A, Ferreira MB, Sherman SJ (2013) The metacognitive advantage of deliberative thinkers: A dual-process perspective on overconfidence. J. Personality Soc. Psych. 105(3):353–373.Crossref, Google Scholar
• Merchant KA, Van der Stede W (2003) Management Control Systems: Performance Measurement, Evaluation and Incentives (Prentice Hall, Harlow, UK)Google Scholar
• Messick DM, Sentis KP (1979) Fairness and preference. J. Experiment. Soc. Psych. 15(4):418–434.Crossref, Google Scholar
• Milgrom P, Roberts J (1992) Economics, Organization and Management (Prentice Hall, Englewood Cliffs, NJ).Google Scholar
• Monden Y (2011) Toyota Production System: An Integrated Approach to Just-In-Time, 4th ed. (CRC Press, New York).Crossref, Google Scholar
• Neale MA, Bazerman MH (1983) The role of perspective-taking ability in negotiating under different forms of arbitration. Indust. Labor Relations Rev. 36(3):378–388.Crossref, Google Scholar
• Neale MA, Bazerman MH (1985) The effects of framing and negotiator overconfidence on bargaining behaviors and outcomes. Acad. Management J. 28(1):34–49.Google Scholar
• Newman AH (2014) An investigation of how the informal communication of firm preferences influences managerial honesty. Accounting Organ. Soc. 39(3):195–207.Crossref, Google Scholar
• Notz WW, Starke FA (1978) Final-offer vs. conventional arbitration as a means of conflict management. Admin. Sci. Quart. 23(2):189–203.Crossref, Google Scholar
• Oberlechner T, Osner C (2012) Survival of overconfidence in currency markets. J. Financial Quant. Anal. 47(1):91–113.Crossref, Google Scholar
• Peng L, Xiong W (2006) Investor attention, overconfidence and category learning. J. Financial Econom. 80(3):563–602.Crossref, Google Scholar
• Pfeffer J, Cialdini RB, Hanna B, Knopoff K (1998) Faith in supervision and the self enhancement bias: Two psychological reasons why managers don’t empower workers. Basic Appl. Soc. Psych. 20(4):313–321.Crossref, Google Scholar
• Ross L (1977) The intuitive psychologist and his shortcomings: Distortions in the attribution process. Adv. Experiment. Soc. Psych. 10:173–220.Crossref, Google Scholar
• Ross L, Ward A (1995) Psychological barriers to dispute resolution. Adv. Experiment. Soc. Psych. 27:255–304.Crossref, Google Scholar
• See KE, Morrison EW, Rothman NB, Soll JB (2011) The detrimental effects of power on confidence, advice taking, and accuracy. Organ. Behav. Human Decision Processes 116(2):272–285.Crossref, Google Scholar
• Starke FA, Notz WW (1981) Pre- and post-intervention effects of conventional vs. final offer arbitration. Acad. Management J. 24(4):832–850.Google Scholar
• Stein JC (2002) Information production and capital allocation: Decentralized vs. hierarchical firms. J. Finance 57(5):1891–1921.Crossref, Google Scholar
• Vaysman I (1998) A model of negotiated transfer pricing. J. Accounting Econom. 25(3):349–384.Crossref, Google Scholar
• Wruck KH, Jensen MC (1994) Science, specific knowledge, and total quality management. J. Accounting Econom. 18:247–287.Crossref, Google Scholar
• Zimmerman JL (2014) Accounting for Decision Making and Control, 8th ed. (McGraw Hill, New York).Google Scholar