The cost of agency problems and the cost of actions taken to minimize them are called

Question

Quizplus · Accepted Answer

The term "agency problems" refers to conflicts of interest that arise between shareholders and management of a company. Agency costs are the expenses incurred by a company to minimize these conflicts and protect the interests of shareholders. Therefore, the correct answer is D. Moral hazard and adverse selection refer to other types of market failures, and company creed refers to a company's mission or values, which is not directly related to agency problems.

The Cost of Agency Problems and the Cost of Actions