Agency costs faced by MNCs may be larger than those faced by purely domestic firms because:

Question

Agency costs faced by MNCs may be larger than those faced by purely domestic firms because:​

Quizplus · Accepted Answer

All of the above reasons contribute to higher agency costs faced by MNCs. Monitoring managers in foreign countries can be challenging due to distance, language barriers, and cultural differences, which can lead to deviations from uniform goals. Additionally, foreign subsidiary managers may have different cultural backgrounds and attitudes towards risk-taking, which could conflict with the overall objectives of the MNC. Finally, MNCs are relatively large, which can make communication and coordination among different units more challenging, thereby increasing the likelihood of agency problems.

Agency Costs Faced by MNCs May Be Larger Than Those