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Limits to the Price Formation: Possibilities and Implications of Setting a Common Interest Rates
[Omezení tvorby transferových cen - možnosti a implikace nastavení obvyklé úrokové míry]

Author

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  • Jiří Jakoubek

Abstract

The paper tries to deepen the understanding of transfer prices determination in both transnational companies and intra-national business relations. It deals with the process of transfer prices formation within intra-group financing. The author focuses mainly on inferring the methodical principles from the general theory. The obtained principles are then confronted with the Czech legislative environment. After specifying the method of common interest rate formation, the author draws reader's attention to the factual impact of a thin capitalization test on arm's length interests based evaluation forming.

Suggested Citation

  • Jiří Jakoubek, 2012. "Limits to the Price Formation: Possibilities and Implications of Setting a Common Interest Rates [Omezení tvorby transferových cen - možnosti a implikace nastavení obvyklé úrokové míry]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2012(4), pages 102-119.
    • Handle: RePEc:prg:jnlcfu:v:2012:y:2012:i:4:id:10:p:102-119
    DOI: 10.18267/j.cfuc.10
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    References listed on IDEAS

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    1. Merton, Robert C, 1974. "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates," Journal of Finance, American Finance Association, vol. 29(2), pages 449-470, May.
    2. Narcisa Kadlcakova & Joerg Keplinger, 2004. "Credit Risk and Bank Lending in the Czech Republic," Working Papers 2004/06, Czech National Bank.
    3. Óscar Montero, 2009. "Forecasting Interest Rates for Future Inter-Company Loan Planning: An Alternative Approach," Archivos de Economía 5840, Departamento Nacional de Planeación.
    4. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Transfer pricing; Arm's length interests; Thin capitalization test; Credit risk; Transferové ceny; Obvyklý úrok; Test kapitalizace; Úvěrové riziko;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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