Maria is a manager for Silverman Racks investment bank.She decides one day to give herself a hefty $250 000 bonus, which will directly reduce the value of each share in the company.Since she only owns 5% of the total shares, she sees a net benefit because she is able to enjoy the entire $250 000 herself.This is an example of what type of costs?

Question

Quizplus · Accepted Answer

This is an example of agency costs, where the manager prioritizes their personal interests over the interests of the shareholders, resulting in a decrease in shareholder value.

Maria Is a Manager for Silverman Racks Investment Bank