TY - JOUR
T1 - Goliath Corporation
T2 - An instructional case in transfer pricing policy
AU - Bailey, Charles D.
AU - Collins, Denton
PY - 2005
Y1 - 2005
N2 - This case illustrates some of the issues associated with setting firms' transfer pricing policies. The simulation requires students to assume the roles of top management and divisional management for Goliath Corporation in negotiating transfer prices. The student playing the role of top management first selects a transfer pricing policy from four possible mechanisms: market-based, cost-based, negotiated, and dual-pricing. Given the top manager's policy choice, divisional managers are then constrained to use that policy as they decide whether to purchase internally or externally based on their respective negotiations. In each negotiation, there is an ex ante best decision for Goliath as a whole. The case is thus useful in demonstrating how managers' transfer price policy choices can lead to bad sourcing decisions.
AB - This case illustrates some of the issues associated with setting firms' transfer pricing policies. The simulation requires students to assume the roles of top management and divisional management for Goliath Corporation in negotiating transfer prices. The student playing the role of top management first selects a transfer pricing policy from four possible mechanisms: market-based, cost-based, negotiated, and dual-pricing. Given the top manager's policy choice, divisional managers are then constrained to use that policy as they decide whether to purchase internally or externally based on their respective negotiations. In each negotiation, there is an ex ante best decision for Goliath as a whole. The case is thus useful in demonstrating how managers' transfer price policy choices can lead to bad sourcing decisions.
KW - Experiential learning
KW - Goal congruence
KW - Transfer pricing
UR - http://www.scopus.com/inward/record.url?scp=33644656684&partnerID=8YFLogxK
U2 - 10.1016/j.jaccedu.2006.01.003
DO - 10.1016/j.jaccedu.2006.01.003
M3 - Article
AN - SCOPUS:33644656684
SN - 0748-5751
VL - 23
SP - 264
EP - 276
JO - Journal of Accounting Education
JF - Journal of Accounting Education
IS - 4
ER -