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

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Agency costs are the costs incurred by shareholders due to the conflicts of interest between managers and shareholders. These costs are not revenues generated by shareholders. While explicit, out-of-pocket expenses may be a part of agency costs, they are not the only element.

Agency Costs Are the Tangible and Intangible Revenues Generated by Shareholders