Which of the following would be considered an agency cost?
A) cost of an annual audit required by bondholders
B) cost of wages paid to factory workers
C) cost of interest paid to bondholders
D) cost of dividends paid to shareholders

Question

Quizplus · Accepted Answer

Agency costs are expenses incurred to ensure that managers act in the best interest of shareholders, such as the cost of an annual audit required by bondholders to monitor management actions.

Which of the Following Would Be Considered an Agency Cost