Which of the following is true?
A)People in firms have equal knowledge
B)Employee empowerment increases when firms centralize key functions
C)Decision rights and knowledge must be separated to minimize agency costs
D)Theft by employees is an example of an agency cost
E)None of the choices are correct

Question

Quizplus · Accepted Answer

Theft by employees is an example of an agency cost because it represents a conflict of interest between the employee and the firm. The employee gains a personal benefit at the expense of the firm, which is an agency problem. The other choices are not true - people in firms do not have equal knowledge, employee empowerment does not increase when firms centralize key functions, and decision rights and knowledge often need to be combined to reduce agency costs.

Which of the Following Is True