The 21st century has experienced two major economic shocks. First, beginning in 2008, severe illiquidity of the financial markets created a drag on economic activity. Second, the worldwide spread of COVID-19 in 2020 has produced an even stronger shock to the economy. Initial estimates predict a 4.8% contraction of US gross domestic product in the first quarter of 2020. In his article “2008 Recession Offers Lessons for COVID-19 Transfer Pricing,” Principal Alan Alford looks broadly at three groups of companies commonly used to benchmark related-party transactions—distributors, manufacturers, and service companies. Dr. Alford examines these groups’ profitability subsequent to the Great Recession and considers how the lessons learned may be applied to companies' transfer pricing policies today.
Dr. Alford's analysis shows that more companies reported lower levels of profitability than reported higher levels.
