The cost of monitoring management is known as ______ in agency theory.

Question

Quizplus · Accepted Answer

The cost of monitoring management is a type of agency cost in agency theory. Agency cost refers to the cost incurred by an agent in order to ensure that the principal's interests are being served. The cost of monitoring management is one such cost incurred by the principal, as they need to effectively monitor the actions of the agent (management) to ensure they are acting in the principal's best interests. Option B, agency control, is not a recognized term in agency theory. Option C, agency effort, is a vague term and not directly related to the cost of monitoring management. Option D, none of these, is incorrect as option A is the correct answer.

The Cost of Monitoring Management Is Known as ______ in Agency