Agency costs can arise when _____.
A)principals and agents have different goals
B)ownership of a company is not separated from organizational control
C)most stockholders are involved the day-to-day operations of companies
D)payments are not rolled into base pay
E)there is information symmetry between the agent and the principal

Question

Quizplus · Accepted Answer

Agency costs can arise from two factors. First, principals and agents may have different goals (goal incongruence). Second, principals may have less than perfect information on the degree to which the agent is pursuing and achieving the principal's goals (information asymmetry).

Agency Costs Can Arise When _____