Balyuk T. Intra-firm Shifting of Financial Resources at Transnational Companies

This dissertation deals with research of shifting of financial resources at TNCs, impact of different intra-firm financial instruments on the flow of financial resources within TNCs, role of financial operations in the organizational and economic system of TNCs, analysis of the practice of use of intra-firm financial instruments by Ukrainian subsidiaries of TNCs. The importance of the research is highlighted by recent trends in increased complexity of intra-firm income-shifting mechanisms and strengthened regulation of intra-firm transactions. The dissertation addresses theoretical and methodological streams of research in the sphere of intra-firm operations. The author presents her own classification of available research. The analysis found that most researchers use indirect approaches to estimation of the amount of financial resources shifted within a TNC as this kind of activity is not reflected in official governmental statistics or corporate financial reports. There is a lack of theoretical underpinning for intra-firm cross-border movement of financial resources by TNCs. Micro- and macroeconomic factors affecting the use of different instruments and amounts of shifted resources, especially by TNCs in Ukraine, are not sufficiently studied. Internalization of transactions with goods and services bring about concentration of financial operations within TNCs. Benefits of intra-firm shifting of financial resources foster internalization of financial activities and bring back changes in organizational structure. These findings broaden the scope of the internalization theory. The amount of internalized financial resources is significant, as is the impact of TNCs' income-shifting decisions on economic processes within the world economy and Ukraine. The dissertation develops conceptual approaches to analyzing macroeconomic implications of intra-firm financial flows, including their impact on tax contributions, competition, financial markets and balance of payments. The dissertation presents a typology of intra-firm financial flows and a classification of intra-firm financial instruments elaborated by the author. The author demonstrates the impact of main intra-firm financial instruments on shifting of financial resources within TNCs and identifies the determinants of the process. A hypothetico-deductive model behind trans-border movement of financial resources at TNCs is developed. The model enables external users to evaluate the probably that certain instruments are used by a TNC and estimate normalized amounts of intra-firm financial flows based on internal and external factors. The practice of the use of intra-firm financial instruments by foreign TNCs in Ukraine is studied based on an anonymous questionnaire-based survey. The author finds substantial difference in the use of intra-firm financial instruments depending on ownership, decision-making system and sphere of activities. The dissertation features analysis of the practice of shifting of financial resources by TNCs with subsidiaries in Ukraine and empirical testing of the proposed hypothetico-deductive model based on collected empirical material.