Under what circumstances could organizations eliminate agency costs, according to agency theory?
A) If they are not publicly traded
B) If bonuses are based on financial performance
C) If they publish audited financial statements
D) Organizations cannot eliminate agency costs

Question

Quizplus · Accepted Answer

Agency costs arise from the inherent conflicts of interest between principals (owners) and agents (managers), and while they can be minimized, they cannot be completely eliminated.

Under What Circumstances Could Organizations Eliminate Agency Costs, According to Agency