Transfer Pricing Aggressiveness and Corporate Governance: Indonesia’s Evidence

Abstract

. This study aimed at developing the transfer pricing aggressiveness measurement and empirically testing the effect of the corporate governance (CG) mechanism on the aggressiveness of transfer pricing. The transfer pricing aggressiveness measurement was developed using PMK No. 213/PMK.03/2016 and regulation of BAPEPAM-LK Number VIII.G.7 (2012) as references. The sample used in this research is 100 companies with the largest market capitalization listed on the Indonesia Stock Exchange (BEI) in the period 2012–2014. The results show that the developed transfer pricing aggressiveness index can be used to measure aggressiveness of transfer pricing. However, this research could not provide support that CG can reduce the aggressiveness of transfer pricing.