Which of the following is an example of agency cost?

Question

Quizplus · Accepted Answer

Agency cost refers to the cost that arises due to the conflict of interest between the principle and the agent hired to manage the principal's affairs. In this case, the failure to make an investment that would have made shareholders wealthier is an example of agency cost since the agent (management) is not acting in the best interest of the principal (shareholders) and is therefore causing a cost to the principal. The other options do not relate to the concept of agency cost.

Which of the Following Is an Example of Agency Cost