The outcome saliency effect on negotiated transfer prices.: An article from: Journal of Managerial Issues

This digital document is an article from Journal of Managerial Issues, published by Pittsburg State University - Department of Economics on September 22, 2004. The length of the article is 7409 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

From the author: Prior management accounting research has investigated the effects of managers' incentive schemes and competitive behavior in maximizing profit from negotiated transfer prices. The rationale for incentives and competitive behavior affecting negotiator effectiveness (i.e., profit) is that these factors affect the trading division managers' risk preferences. More current research in negotiation suggests that negotiators' perception of the negotiation situation affects the outcomes. The current study, therefore, examines the effect of perceived negotiation situation via salience of the optimal payoff in a multi-period bargaining setting where the transfer price is negotiated between trading divisions. For comparison purposes, the study also examines the role of negotiating managers' risk preferences on transfer pricing in the same multi-period setting. The results indicate that both risk preference and outcome salience affects negotiator effectiveness. Importantly, the current study also finds that, over multiple periods, the perceived negotiation situation (i.e., outcome salience) improves negotiator effectiveness over and above the effect from risk preference alone.

Citation Details
Title: The outcome saliency effect on negotiated transfer prices.
Author: Dipankar Ghosh
Publication:Journal of Managerial Issues (Refereed)
Date: September 22, 2004
Publisher: Pittsburg State University - Department of Economics
Volume: 16 Issue: 3 Page: 305(19)

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