G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; GoodwillReturn

The article analyses expected impacts of The Anti-Tax Avoidance Directive (ATAD) implementation, respectively planned amendment to the Czech Income Tax Act, which implements among others also administrative limitations on tax deductibility of interest expenses, and tax shields used in company valuation. The article presents time distortion in calculation of tax deductibility of interest expenses and the amount of interest-bearing capital after the regulation on a practical example. Then it defines general formulas for the calculation of tax shields resulting from the regulation including the model for the second phase of valuation. The article states the main topics in business valuation which will be affected by the regulation.

The article discusses the auditor's responsibility - first in general and subsequently in relation to transfer prices for related parties. The basis for the assessment of transfer prices from the auditor perspective is the view of accounting regulations and auditing standards. Based on the auditor's responsibility analysis, the article analyzes the judiciary's decision-making based on the relationship between the auditor's report and transfer prices. The research based on the case law of the Supreme Administrative Court refers to the auditors' failure in issuing auditor's reports on the financial statements. The result of the research shows that the auditor did not pay enough attention to the correct setting of transfer prices. The consequences are not only tax credits, but also incorrectly reported information on expenses (revenues) and profit or loss of the entities in their financial statements.

The article examines the dependence of the costs of borrowed capital on two financial variables (interest coverage and the total volume of interest-bearing borrowed capital). The aim is to evaluate the ability of these two variables to predict the costs of borrowed capital for the purpose of business valuation. Interest coverage as the first variable has been chosen as the main component of the interest coverage model suggested by A. Damodaran in 2006. This model is recommended in literature as one of the possible methods for the estimation of the costs of borrowed capital. This model is not based on the Czech data and that is the reason why I try to evaluate in what extent this variable is useful for the estimation of costs of borrowed capital in case of the Czech companies. The absolute value of interest bearing borrowed capital as a second variable has been chosen because it represents the approximation of the loan volume which as I expect bears lower interest rates in case of higher loan volumes. For the purpose of analysis the regression model was applied on the sample of 8 358 companies which were active in the period 2013 -2016 in Czech Republic. Weak indirect dependence was detected between the two observed variables and the costs of borrowed capital. It has also been proven that using a specific combination of these two variables the costs of borrowed capital can be estimated for 65% of companies in the sample with the deviation smaller than 1.5 percentage points.

This paper deals with the comparison of stress tests of institutions using the IRBA method for determining the capital requirement. Different approaches have been used to determine the values of risk parameters PD, EAD and LGD for stres test purpose. Besides the VEC model, which link risk parameters to selected macroeconomic variables, stress tests were constructed using the absolute values model, the relative change model and the VaR model, CVaR respectively. Individual approaches have been tested and compared in two levels. In the first level was stressed only the risk parameter PD, in the second level, all risk parameters were stressed. Empirical analysis on the retail portfolio of retail clients in the Czech Republic during 2005 - 2017 showed some significant differences in the value of capital among some approaches. It has also been demonstrated that by using the appropriate method for stressing only the PD parameter, the same value of capital can be achieved as in the case of stressing all risk parameters simulating the conditions required by the Basel Committee.

The paper deals with the stress test of institutions using IRBA method for determining the capital requirement. The VEC model was used to quantify the links between the macroeconomic variables and the risk parameters of PD, EAD and LGD. In addition to the construction of the VEC model itself, the paper presents the process of selecting appropriate macroeconomic variables and aggregating risk parameters. To design the stress scenario, the method of maximum penalizing the risk parameters of PD was used because of the failure to prove the links between the macroeconomic variables and the EAD and LGD parameters. Empirical analysis of individual variables and subsequent quantification of capital for stress test purposes was performed on the real portfolio of the retail client.

This article is aimed at the analysis of capital structure of joint stock companies based in the Czech Republic operating in agriculture, industry and building, using the basic principles and ratios of financial analysis. The levels of debt ratio are judged not only according to industry classification but also according to the type of ownership. In the next step, the relationship between leverage and profitability is closely explored since it is thought to be one of the main determinants. Lastly, the liquidity is analysed as a characteristic of short term financial management. The results show that the level of leverage does not change significantly during the followed period. Considering the resources of financing, the share capital plays dominant role being supplemented by retained earnings, apart from payables bank financing is also very important liability. As far as the capital structure theories are concerned, arguments for validity of both are founded.

This paper deals with theme methods for determining the amount of Loan Loss Provisions (LLP). The most common methods for determining the amount of loan loss provisions used by credit institutions include Roll Rates and Markov's chains methods. This paper aims to show and explain the steps leading to the determining the amount of loss loan provisions for credit losses using mentioned methods and to define the causes of different levels of reserves for individual approaches. Roll Rates and Markov's chains approaches are subsequently tested on two real portfolios retail clients in two different countries. Empirical tests have demonstrated significant differences confirming the theoretical assumption of different levels of loan loss provisions using Roll Rates and Markov's chains approaches.

This paper deals with achieving hedge accounting for portfolio of assets and liabilities. Furthermore, provides brief comparison between currently effective hedge accounting rules embodied in IAS 39 and forthcoming standard IFRS 9. The aim of presented paper is to highlight possible linkage between hedge accounting rules and earnings management, moreover, shows how might be risk management strategy of the firm adjusted in order to achieve hedge accounting. The paper also provides small review of relevant research made in area of earnings management and derivatives accounting.

The aim of this paper is on the issue of low returns in the Czech Republic to offer a new perspective. Article concerns the agency theory before the bankruptcy proceedings with regard to the specifics of Czech Republic. Given that bank lenders have better bargaining power in comparison with other classes of creditors, the view focuses on their activity while initiating bankruptcy. The article tries to estimate what percentage of insolvencies could be launched in the Czech Republic by bank lender based on the specific position of individual groups of debtors before insolvency proceedings. Bank lenders have stronger monitoring and enforcement means, which gives them a specific opportunity to initiate proceedings in a better timeframe than other creditors.

Asymmetric information is a part of market failure. It leads to market imperfections and inefficiency of economic markets. We can meet serious asymmetric information in initial public offerings when companies go public. In IPO process, better-informed party can take an advantage considering new potential investors. Asymmetric information could be identified in IPO timing decisions and we can analyze it by effects on underpricing and underperformance factors. This study deals with asymmetric information's influence on IPO timing, signaling in IPO and underperformance of IPO.

Building industry is an important indicator of the business cycle of the economy, because it is tied to movements and variations in the national economy. Building industry reacts directly and flexibly to any changes in the economic cycle and has multiplying effect on the development of other sectors. Investment in building industry actually causes the entire chain in the economy demand for goods and services, which is reflected especially in the activities of economic entities in employment, but also in public budgets. The aim of the article was to analyze and evaluate the development of the construction sector in the Czech and Slovak Republic. The paper analyzes the construction of power production, development of the share of the gross domestic product of a country and the effect of foreign capital (FDI) on the production performance of the building industry sector.

Competitive environment enables healthy operation only to those companies that are able to perfectly manage not only the business side of the entrepreneurial activities (sale of products and services surely is purpose of existence of any company), but also the financial side which constitutes a significant part of strategic decision-making process. And thus, from the view of corporation operating, the most important parameters are profitability and liquidity. The emphasis is also put on aspects of development of economic cycle and trust indicators. The comparison was made on the level of business branches. The aim of the paper is to evaluate the practical view of the theoretical data resulting from the fact that the low level of profitability will

All transactions in multinational enterprises which are realized among group members are very sensitive to tax risks arising from (appropriate) asset valuation. The more often the transactions are connected to intangible assets or R&D services the more tax risks they generate. This article identifies theoretical and then practical issues while stating license fees or intangible asset valuation. The authors show how it is possible to use purpose-built model of license fees for optimizing tax position of each group member, especially of the member who develops specific intangible asset. The authors compare the old version of OECD Transfer pricing for MNEs Guidelines in mentioned field with the proposed version, too.

The paper tries to deepen the understanding of transfer prices determination in both transnational companies and intra-national business relations. It deals with the process of transfer prices formation within intra-group financing. The author focuses mainly on inferring the methodical principles from the general theory. The obtained principles are then confronted with the Czech legislative environment. After specifying the method of common interest rate formation, the author draws reader's attention to the factual impact of a thin capitalization test on arm's length interests based evaluation forming.

Paper analyzes theoretical background and provides the valuation formulas for standard and amortized Interest Rate Swap (IRS) valuation. Valuation IRS is provided in time of buy or sell IRS or as the valuation of the existing IRS. Paper provides practical aspects of valuation for valuation practice practice and includes necessary formulas too. Problems with display of IRS in double-entry accounting are mentioned also. Paper drew attention to the difficulties of capturing the IRS as the investment tool with "zero" price in the assets or increasing the amount of balance sum in cases where IRS is recorded as a pair of transactions "purchased bond" and "issued bond".

Text is focused on the analysis of risk emerging from the changes of issuer's risk premium. There are mentioned determinants of risk premium based on default models and empirical studies. Value at Risk model based on market data of credit spreads is proposed as a measure of refinance risk. Bond issuers should use stress scenario based on data from financial crisis in 2008 as a natural part of risk management system. In the text is also closely analyzed the special case of Czech bond market.

The paper explores the effective design of management control systems in terms of managing exchange rate risks for not-for-profit non-governmental organizations (NGOs). Compared to business organizations, NGOs have just limited possibilities to tackle these risks for several reasons discussed in the paper. The paper focuses on effective design of control system to manage the exchange rate risk. The basic theoretical framework is described, same as the terminology used by NGOs to set up the financial report to their donors when having to convert the project expenses from primary to reporting currency. Then, based on the case study, various reporting procedures are discussed in terms of their advantages and disadvantages related to exchange risk exposure of both the project itself and organization as a whole. Finally, the recommendations are proposed how NGOs should set their control systems in order to manage their exchange rate risk effectively.

Financial crisis has shown significant gaps in risk management system in financial institutions. The major critics focused on an inappropriate usage of the innovative financial products with not adequate reflection of capital requirements for their market risks, not adequate valuations of those products with reliance on external valuation by rating agencies, not transparent settlement via OTC and not adequate collateral management combined with the extreme financial leverage in those positions and unduly concentrations on the dozen counterparties. The proposed changes in regulatory regimes address major gaps in risk management system like the more stringent guidelines for liquidity risk management, the general increase of capital requirements and capital transparency on credit derivatives, securitization, etc. plus the abolishment of hybrid capital and the convertible capital from Tier 1 core capital; the more stringent requirements on risk models combined with the stress testing requirements to cover the extreme market events.

The article deals with current issues of the self-regulation in the insurance market and demonstrates on the example the consequences of its improper implementation. The introductory essay brings the author's view of self-regulation definition. Further, the article deals with the environment in which the publication of "Ampelcheck Geldanlage" was issued by the Association of Consumer Hamburg. The publication was issued mainly to reduce information asymmetry from the side of insurance brokers and correct behavior of clients in the selection of suitable investment instruments for the creation of financial reserves for lately term of life. However, since it has several simplifications that have led to the erroneous conclusions for the insurance products, therefore the main part of the article concentrates on the analysis of conclusions from the publication and their confrontation with the current state of science. The article confirmed the importance of self-regulation and declared the requirements on its correct usage in practice. Mainly forward mutual communication and coordination of all concerned parties are necessary for effective implementation of any tool of self-regulation.

Economic rising request a new types and form and resources for financing needs and investing. Clear chance appears use of venture capital accumulated equity capital by private investors. Private equity can be used to develop new products and technologies, to expand working capital, to make acquisition. Trough this form of investment is increased the competitiveness of domestic firm's within the framework economic competition.