The ways to address agency costs include

Question

​The ways to address agency costs include

Quizplus · Accepted Answer

All of the above ways, i.e., gathering information both before and after hiring, and incentivizing agents to work on behalf of principals, are effective in addressing agency costs. By gathering information about the agent's characteristics and actions, the principal can monitor the agent's work and take corrective actions. Incentivizing agents through performance-based compensations or monitoring systems can align the interest of the agents with that of the principal, reducing agency costs. Therefore, all the methods given in options A, B, and C are important to address agency costs.

​The Ways to Address Agency Costs Include

The Ways to Address Agency Costs Include