For the MNC, agency costs are typically:
A) non-existent.
B) larger than agency costs of a small purely domestic firm.
C) smaller than agency costs of a small purely domestic firm.
D) the same as agency costs of a small purely domestic firm.

Question

Quizplus · Accepted Answer

MNCs have more complex organizational structures and diverse stakeholder interests, leading to larger agency costs compared to a small purely domestic firm. MNCs need to have mechanisms in place to monitor and control their subsidiaries, which involves additional costs. Additionally, MNCs may face issues with cultural differences and legal restrictions in different countries, which adds to their agency costs.

For the MNC, Agency Costs Are Typically