Template-Type: ReDIF-Article 1.0
Author-Name: Magdalena Jerzemowska
Title: The Main Agency Problems and Their Consequences
Abstract: The main aim of the paper is to present the most important conflicts of interest between "agents and principals" as well as the mechanisms for limiting these conflicts. The reduction of free cash flow through the use of debt, and the use of protective bond covenants, are important means of reducing agency costs. It is pointed out that new equity dilutes the holdings of managers with equity interests, increasing their motive to waste resources, while debt reduces free cash flow, and the opportunity for managers to waste resources. Various types of protective covenants are presented in the paper. Because shareholders must pay higher interest rates as insurance against their own selfish strategies they frequently make agreements with bondholders in the hope of paying lower interest rates. These agreements are incorporated as part of the loan document between shareholders and bondholders.These protective covenants should reduce the costs of bankruptcy and ultimately increase the value of the firm.
Keywords: conflict, agency theory, covenants
Classification-JEL: G30
Pages: 9-17
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=73.pdf
File-URL: http://www.vse.cz/aop/73
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:73:p:9-17

Template-Type: ReDIF-Article 1.0
Author-Name: Jiří Hlaváček
Author-Name: Michal Hlaváček
Title: "Principal - Agent" Problem in the Context of the Economic Survival
Abstract: This paper analyses problems within the asymmetric information models (principal agent models) where we replace standard assumption of maximisation of expected income by maximisation of probability of economic survival. This paper concentrates on two basic models - adverse selection model and moral hazard model. In both cases the effect of asymmetry of information gets weaker or even disappears. Contrary to standard approach the competitive Pareto effective equilibrium could exists in both models with pooled contract with full coverage of possible accident by the principal.
Keywords: moral hazard, adverse selection, probability of survival, Pareto distribution
Classification-JEL: D82
Pages: 18-33
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=81.pdf
File-URL: http://www.vse.cz/aop/81
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:81:p:18-33

Template-Type: ReDIF-Article 1.0
Author-Name: Karel Janda
Title: Agency Theory Approach to the Contracting between Lender and Borrower
Abstract: The paper provides an overview of several selected topics dealing with application of agency theory to the credit contracts. The costly state verification and costly punishment models of optimal debt contracts are introduced and compared with respect to their performance in the situation characterized by risk aversion. Adverse selection in credit markets and its solution with a menu of screening contracts is described and the use of collateral as a screening instrument is discussed. The dynamic relationship between the lender and borrower is introduced in a soft budget constraint model of default and bankruptcy decisions. Alternative assumptions about informational asymmetries in credit markets are presented as well. For all these topics a number of references from Czech and iternational economic literature is provided.
Keywords: Credit, moral hazard, adverse selection, principal, agent, contracts
Classification-JEL: C72, D82, G21
Pages: 34-47
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=84.pdf
File-URL: http://www.vse.cz/aop/84
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:84:p:34-47

Template-Type: ReDIF-Article 1.0
Author-Name: Stanislav Klazar
Title: Tax Revenue Prediction under Condition of Imperfect Control over Tax-Collecting Authority
Abstract: Public revenue forecasts should be accurate and unbiased, it means they should be the best estimates (in statistical view) of expected receipts. This paper analyzes the possible reasons for biased (overestimated or underestimated) tax revenue forecasts. Our modification of Danninger's theoretical model demonstrates that systematically (over a long period)and intentionally (deliberately) biased revenue forecasts can be result of the government's (principal's) attempt to increase the effort of tax-collecting authority (agent) to collect revenue. We carry out empirical analysis to test one of the model implications - relation between effort and relative grow of tax revenue. We use data from the years 2004 and 2005 for Corporate Income Tax collected in 16 tax-collecting authorities.
Keywords: agency theory, principal, agent, revenue forecast, biased forecast
Classification-JEL: H2, H3
Pages: 48-62
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=86.pdf
File-URL: http://www.vse.cz/aop/86
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:86:p:48-62

Template-Type: ReDIF-Article 1.0
Author-Name: Pavel Kraus
Title: Impact of Taxes and Agency Costs on Dividend Policy
Abstract: Real estate investment trusts (REIT) in USA have been imposed a 95% required minimum dividend payout ratio. Empirical observations have proved that this limit is not sufficient to explain REIT's dividend policies. Most of them pay out more than required by tax law. Imperfect information and agency costs are hypothesized to be the explanation. Therefore,possible factors for identifying of agency costs are introduced - type of investment fund, ROA, Tobin's Q, asset growth, debt to asset - ratio. Finally, authors of empirical research have proved at least partial impact of agency costs on dividend.  This article deals with possibilities of avoidance of tax burden on dividend income by levering of portfolio and conversion of dividends to capital gains. Furthermore, loan funds can be invested in life insurance to hold the risk of portfolio at the level of unlevered portfolio. There are other financial instruments such as building saving or pension insurance,which can be also used to unlever the portfolio.
Keywords: dividend, tax, capital gain
Classification-JEL: G30
Pages: 63-72
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=90.pdf
File-URL: http://www.vse.cz/aop/90
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:90:p:63-72

Template-Type: ReDIF-Article 1.0
Author-Name: Libor Kaiser
Title: Agency Relationship and Transfer Pricing Inefficiency
Abstract: Transfer pricing policy is a very important activity within multinational firms. The importance of this policy has been increasing since the time of globalization has come. There are many reasons for implementing such a policy. The international capital mobility allows multinational firms to allocate capital among their subsidiaries mainly due to savings connected to the taxation policies of individual states. It is not easy to study transfer pricing because it belongs to best guarded know-how of each firm. In this article I will show possible inefficiencies of transfer pricing using an agency theory point of view.
Keywords: agency theory, transfer pricing, multinational firm, taxation policy
Classification-JEL: G390
Pages: 73-81
Volume: 2006
Issue: 3
Year: 2006
File-URL: http://www.vse.cz/aop/download.php?jnl=aop&pdf=94.pdf
File-URL: http://www.vse.cz/aop/94
File-Format: text/html
Handle: RePEc:prg:jnlaop:v:2006:y:2006:i:3:id:94:p:73-81