Monitoring generally reduces agency costs.

Name: Monitoring generally reduces agency costs.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Monitoring is a control mechanism that ensures that agents (employees or managers) are following the directives of principals (owners or shareholders). By doing so, monitoring reduces agency costs as it prevents agents from pursuing their interests at the expense of principals. Thus, the statement is true.

Monitoring Generally Reduces Agency Costs