Examples of Agency Costs Incurred by Shareholders to Minimize Agency

question 71

Multiple Choice

Examples of agency costs incurred by shareholders to minimize agency problems are:

• A)Expenditures associated with independent auditing.
• B)Expenditures associated with SEC approval.
• C)Expenditures associated with monitoring management's actions
• D)Expenditures associated with inventory control.

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Definitions:

Subsidiary Divestiture

The process of a parent company selling off or otherwise disposing of a part of its business operations, often a subsidiary, division, or asset.

Leveraged Buyout

The acquisition of another company using a significant amount of borrowed money to meet the cost of acquisition.

Collateral

Assets pledged by a borrower to secure a loan or credit, which the lender may seize if the borrower fails to repay the agreed amounts.

Acquisition

The process of obtaining control of another company or business entity through purchase or merger.