Transfer prices are prices determined in the purchase and selling transactions between business segments or divisions within a company. Tax aspect and the management aspect of transfer prices are usually considered in the literature and praxis. Research in this paper is focused on the relation between the degree of autonomy of divisional managers by making decisions and the way of determining transfer prices in selling and purchase transactions between divisions of a company.The aim of this paper is to introduce problem of transfer pricingand to explain how decentralized decision makingthrough the transfer pricing system affectsshort-run and long-run divisional and corporate performances. Research has been carried out on a small sample of multidivisional companies that operate in Serbia. The main hypothesis is not confirmed, unlike similar results of researches carried out earlierin developed economies.Spearman's rank correlation coefficient and Phi coefficient are used in this research, as well as nonparametric Mann Whitney test.