Agency costs are the intangible expenses borne by shareholders because of the actual or potential self-serving actions of managers; they include only implicit (no cash is spent explicitly) expenses.

Question

Quizplus · Accepted Answer

Agency costs include both explicit costs (such as monitoring and bonding costs) and implicit costs (such as lost opportunities) due to the separation of ownership and control in a corporation.

Agency Costs Are the Intangible Expenses Borne by Shareholders Because