Agency costs refer to:
A) The costs incurred in monitoring managerial performance
B) The costs incurred because there is information asymmetry between the corporation and outsiders
C) The costs incurred because insiders know more about a company than do outsiders
D) All of these

Question

Quizplus · Accepted Answer

Agency costs refer to all the mentioned costs incurred in monitoring managerial performance, information asymmetry between the corporation and outsiders, and insiders having more knowledge about the company than the outsiders. These costs arise due to conflicts of interest between the company's management and shareholders, leading to the loss of value for shareholders.

Agency Costs Refer To