Transfer Pricing in the Decentralized Multinational Corporation

This paper considers how the multinational corporation's transfer price responds to changes in international corporate effective tax rates. It extends the decentralized decision-making analysis of transfer pricing in the context of different tax rates. It adopts and extends Bond's (1980) model of the decentralized multinational corporation that assumes centralized transfer pricing. The direction of transfer price change is as expected, while the magnitude of change is likely to be less than predicted by the Horst (1971), centralized decision-making model. The paper extends the model further by assuming negotiated transfer pricing, where the analysis is partitioned into perfect and imperfect information cases. The negotiated transfer pricing result reverts to the Horst (1971), or centralized decision-making, result, under perfect information. Under imperfect information, the centralized decision-making result obtains when top management successfully informs division general managers or it successfully implements a non-monetary reward scheme to encourage division general managers to cooperate. Under simplifying assumptions, centralized decision-making dominates decentralized decision-making, while negotiated transfer pricing weakly dominates centralized transfer pricing.

International Transfer Pricing for Goods and Intangible Asset Licenses in a Decentralized Multinational Corporation: Review and Extensions

We review and extend the core literature on international transfer price manipulation to avoid or evade taxes. Under negotiated transfer pricing with a viable bargaining structure, including performance evaluation disconnected from the transfer price, divisions voluntarily exchange accurate information to obtain firm-wide optimality, a result not dependent on restraint from exercising internal market power. For intangible licenses, a larger optimal profit shift for a given tax rate change strengthens incentives for transfer pricing abuse. In practice, an intangible's arm's length range is viewed as a guideline, a context where incentives for abuse materialize. Transfer pricing for intangibles obliges greater tax authority scrutiny.

JTT-130, a Microsomal Triglyceride Transfer Protein (MTP) Inhibitor Lowers Plasma Triglycerides and LDL Cholesterol Concentrations without Increasing Hepatic Triglycerides in Guinea Pigs

BACKGROUND: Microsomal transfer protein inhibitors (MTPi) have the potential to be used as a drug to lower plasma lipids, mainly plasma triglycerides (TG). However, studies with animal models have indicated that MTPi treatment results in the accumulation of hepatic TG. The purpose of this study was to evaluate whether JTT-130, a unique MTPi, targeted to the intestine, would effectively reduce plasma lipids without inducing a fatty liver. METHODS: Male guinea pigs (n = 10 per group) were used for this experiment. Initially all guinea pigs were fed a hypercholesterolemic diet containing 0.08 g/100 g dietary cholesterol for 3 wk. After this period, animals were randomly assigned to diets containing 0 (control), 0.0005 or 0.0015 g/100 g of MTPi for 4 wk. A diet containing 0.05 g/100 g of atorvastatin, an HMG-CoA reductase inhibitor was used as the positive control. At the end of the 7th week, guinea pigs were sacrificed to assess drug effects on plasma and hepatic lipids, composition of LDL and VLDL, hepatic cholesterol and lipoprotein metabolism. RESULTS: Plasma LDL cholesterol and TG were 25 and 30% lower in guinea pigs treated with MTPi compared to controls (P < 0.05). Atorvastatin had the most pronounced hypolipidemic effects with a 35% reduction in LDL cholesterol and 40% reduction in TG. JTT-130 did not induce hepatic lipid accumulation compared to controls. Cholesteryl ester transfer protein (CETP) activity was reduced in a dose dependent manner by increasing doses of MTPi and guinea pigs treated with atorvastatin had the lowest CETP activity (P < 0.01). In addition the number of molecules of cholesteryl ester in LDL and LDL diameter were lower in guinea pigs treated with atorvastatin. In contrast, hepatic enzymes involved in maintaining cholesterol homeostasis were not affected by drug treatment. CONCLUSION: These results suggest that JTT-130 could have potential clinical applications due to its plasma lipid lowering effects with no alterations in hepatic lipid concentrations.

Differential Cytoplast Requirement for Embryonic and Somatic Cell Nuclear Transfer in Cattle

Effective activation of a recipient oocyte and its compatibility with the nuclear donor are critical to the successful nuclear reprogramming during nuclear transfer. We designed a series of experiments using various activation methods to determine the optimum activation efficiency of bovine oocytes. We then performed nuclear transfer (NT) of embryonic and somatic cells into cytoplasts presumably at G1/S phase (with prior activation) or at metaphase II (MII, without prior activation). Oocytes at 24 hr of maturation in vitro were activated with various combinations of calcium ionophore A23187 (A187) (5 microM, 5 min), electric pulse (EP), ethanol (7%, 7 min), cycloheximide (CHX) (10 micro g/ml, 6 hr), and then cultured in cytochalasin D (CD) for a total of 18 hr. Through a series of experiments (Exp. 1-4), an improved activation protocol (A187/EP/CHX/CD) was identified and used for comparison of NT efficiency of embryonic versus somatic donor cells (Exp. 5). When embryonic cells from morula and blastocysts (BL) were used as nuclear donors, a significantly higher rate of blastocyst development from cloned embryos was obtained with G1/S phase cytoplasts than with MII-phase cytoplasts (36 vs. 11%, P < 0.05). In contrast, when skin fibroblasts were used as donor cells, the use of an MII cytoplast (vs. G1/S phase) was imperative for blastocyst development (30 vs. 6%, P < 0.05). Differential staining showed that parthenogenetic, embryonic, and somatic cloned BL contained 26, 29, and 33% presumptive inner cell mass (ICM) cells, respectively, which is similar to that of frozen-thawed in vivo embryos at a comparable developmental stage (23%). These data indicate that embryonic and somatic nuclei require different recipient cytoplast environment for remodeling/ reprogramming, and this is likely due to the different cell cycle stage and profiles of molecular differentiation of the transferred donor nuclei.