Study On The Factors Of The Fairness Of Transfer Pricing Of Related Party Transactions

In recent years, China’s securities market to flourish, but also frequently burst like purple Xin Pharmaceutical, Edmond Health Division and other listed companies’ financial fraud scandal, these cases can be found by observing its operation process and ultimately a "good helper"- related party transactions. Listed companies use transfer of benefits related transactions, to manipulate profits, whitewash report has become a common phenomenon in the capital market used to see a phenomenon. This behavior is against the interests of minority shareholders, misleading investors, greatly disrupting the order of the securities market, but also to the healthy development of China’s capital market cast a shadow. The related party transactions is a neutral economic behavior of listed companies abuse, misuse related transactions, will form unfair related transactions, related party transactions are fair judgment, the key depends on the price of related transactions involved, and to develop the transaction price The method, that is, transfer pricing.The method involves the formulation of relevant price transfer pricing refers to the same enterprise or enterprise group, the mutual transfer between related parties a department to another department or the parent company, a subsidiary of the child and other goods, services, capital and technology resources. Transfer pricing has two drive elements are driven and tax management driven. ARVC multinationals use tax-driven transfer pricing to reduce the tax burden, driven by positive performance management for the performance evaluation and internal transaction cost savings, the negative performance is the transfer of benefits and whitewash report. Transfer pricing brings many negative effects, largely because of unfair pricing, if the transfer price is the transfer of benefits and fair behavior whitewash report, the listed companies will lose space operations. The factors causing the non-transfer pricing fair external and internal factors, external factors is the lack of effective supervision of the stock market, the performance of the internal factors of corporate governance mechanism is not perfect.Based on corporate governance point of view, the use of theoretical analysis and empirical combination of research related transactions Transfer Pricing fairness factor. Ownership Structure in Corporate Governance as an integral part of its development of transfer pricing policies deeply influenced Chinese and foreign scholars in the study of transfer pricing problems, inevitably involves the controlling shareholder of motivation will transfer pricing the fairness of adverse effects, and institutional investors will be the controlling shareholder of a certain checks and balances of state-owned shareholders after the share reform since the lack of regulation will increase the fairness of the non-transfer pricing; the board of directors play an extremely important role in corporate governance, to enhance the independence of the board’s transfer pricing fair has a great power, and the independence of the board of directors of the performance of independent size and whether part-time chairman and general manager; transparency of information disclosure is an important criteria for evaluating the merits of the corporate governance mechanism while its audit opinion the auditor evaluation method depends largely on the quality of administration and audit. Therefore, this article from the ownership structure, board independence, disclosure and transparency of the three factors to validate their transfer pricing fairness.