Agency costs are the tangible and intangible expenses borne by shareholders because of the actual or potential self-serving actions of managers;and agency costs include explicit,out-of-pocket expenses.

Question

Quizplus · Accepted Answer

Agency costs are indeed the tangible and intangible expenses incurred by shareholders due to the actual or potential self-serving actions of managers. Furthermore, these costs can include explicit costs that can be directly measured and tracked, such as legal fees or executive compensation, as well as implicit costs that are more difficult to quantify, such as missed investment opportunities or lower shareholder confidence.

Agency Costs Are the Tangible and Intangible Expenses Borne by Shareholders