Business Cycle and TPM of TNCs英文文献资料.docVIP

Modern Economy, 2011, 2, 546-551 doi:10.4236/me.2011.24060 Published Online September 2011 (http://www.SciRP.org/journal/me) Business Cycle and TPM of TNCs Junrong Liu School of Tourism and Management Economics, Leshan Normal University, Leshan, China E-mail: liujr@ Received June 23, 2011; revised July 26, 2011; accepted August 5, 2011 Abstract This article is devoted to analyses on effects of the four phases of business cycle on transfer pricing manipu- lation (TPM) of transnational corporations (TNCs) and TNCs’ possible TMP practices through business cy- cle. The researcher herein holds that business cycle arouses the fluctuation of economical indicators and pol- icy changes, which subsequently affect TNCs’ production, financial situation, sales and their resource alloca- tion globally. Acting as a reasoning business being, TNCs should take according strategies to manipulate transfer pricing to harbor the possible benefit and escape from any risk ahead, by taking advantage of their “Trans-nationality”. Keywords: Business Cycle, Transfer Pricing, Manipulation, TNCs 1. Introduction production strategies and construct the network of senti- nel production of specialized factories worldwide, and spare parts’ manufacturing division and logistics leading to the favorable locations, assembling bases and direct marketing sub-centers. In order to face up the fierce mar- ket competition, Transnational corporations have produ- ction activities in different countries linked together th- rough the production system, which covers investment and trade activities, and convert a majority of their trade into intra-firm trade among the parent company and sub- sidiaries or among the affiliates. [1,2] The trans-nation- ality of TNCs makes them enjoy the broad geographical space, wide market and convenient finance, and thus renders TNCs much mobility in dealing with various risks. Economic cycle is an objective economic phenom