Determination of Transfer Pricing Practices in Indonesia: Empirical Study on Primary Consumer Sector Companies Listed on the IDX in 2023-2025 (Lead Journal of Economy and Administration)

Summary

• The sample comprises 150 observations from primary consumption sector manufacturing companies on the Indonesia Stock Exchange for 2023-2025.p.1
• Tunneling Incentive has a positive and significant effect on transfer pricing, with a coefficient of 3.564 and significance of 0.023.p.9
• The Bonus Mechanism has a negative and significant effect on transfer pricing, with a coefficient of -0.554 and significance of 0.010.p.9
• Leverage has no significant effect on transfer pricing, with a coefficient of 2.138 and significance of 0.093.p.9
• The Hosmer and Lemeshow test gave a Chi-square of 5.519 and significance of 0.701, so the logistic model meets feasibility.p.8

Key insights

1. The higher the tunneling incentive, the more likely a company is to engage in transfer pricing.p.1
2. Increases in the bonus mechanism tend to reduce the likelihood of companies engaging in transfer pricing.p.1
3. Tunneling Incentive shows a positive and significant effect on transfer pricing decisions (B = 3.564, Sig = 0.023).p.9
4. The Bonus Mechanism has a negative and significant effect on transfer pricing decisions (coefficient -0.554, significance 0.010).p.9
5. Leverage does not significantly affect transfer pricing at the 5% level (B = 2.138, Sig = 0.093).p.10
6. The mean tunneling incentive value is 0.596 across 150 observations.p.8