M50 - Personnel Economics: GeneralReturn

Selected aspects of new legal regulation of corporations in the Czech Republic is described and analyzed in this paper. These new stipulations will affect the corporate financial management in the Czech Republic from the beginning of 2013. The changes are not substantial in many aspects; however the regulation of transfer pricing and information obligations of corporations towards shareholders changes significantly. Till now the regulation of transfer prices in corporate law led to the same results as the regulation stipulated by tax law. Now the new law on business corporations allows compensation of the transfer prices with the advantages, which result from the membership in multibusiness enterprise (holding).

We examine agency cost in the multibusiness enterprises (hereinafter "MBE"). Our goal is to find out, whether is there a positive relationship between the complexity of MBE and agency cost. Results are ambiguous, nevertheless we got an indirect indication that more complex MBE bring more advantages than disadvantages and that the avoidable agency costs are effectively eliminated at the lower levels of MBE structure. It emerges then that the main reason for agency cost is information asymmetry and the largest part of avoidable agency cost emerges in the highest levels of corporate hierarchy.