Which of the Following Does Not Represent an Agency Cost

question 25

Multiple Choice

Which of the following does not represent an agency cost resulting from the separation of ownership from control of the firm?

• A)The expense of providing management with bonuses based on profitability.
• B)The cost of a company director taking a business trip to Hawaii with no potential benefit to the company.
• C)The cost of a staff Christmas party designed to enhance staff morale.
• D)The cost of monitoring the activities of management to keep track of its expenditures and decisions.

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Definitions:

Operational Definition

A clear, precise description of a variable within a study in terms of the specific operations or activities used to measure or manipulate it.

Conceptual Definition

A definition that provides a theoretical or abstract understanding of a term or concept, often found in academic and research contexts.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, which outlines a five-tier model of human needs, categorized into physiological, safety, love/belonging, esteem, and self-actualization needs.

Basic Priority

The fundamental level of importance or urgency assigned to tasks or concerns that need to be addressed first.