Failure to monitor the actions of firms in a timely and complete fashion after purchasing securities in that firm exposes the investor to agency costs.

Question

Quizplus · Accepted Answer

Monitoring the actions of firms after purchasing securities is important to ensure the firm is acting in the best interest of the investor. Failure to do so can expose the investor to agency costs, which arise from the underlying conflict of interest between the investor and the manager of the firm. Therefore, it is important to monitor the actions of firms in a timely and complete fashion.

Failure to Monitor the Actions of Firms in a Timely