While Debt Can Reduce Agency Costs Between Shareholders and Management

question 14

Multiple Choice

While debt can reduce agency costs between shareholders and management,

• A)debt can create its own agency costs.
• B)this only happens at extreme levels of debt.
• C)this does not work for firms in mature industries with large cash reserves.
• D)none of the above are true

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Definitions:

Avoiding

A conflict management style where individuals ignore or withdraw from a situation to evade disagreements or confrontations.

Empathetic

Exhibiting the ability to understand and share the feelings of others.

High-High Style Leader

A leadership approach characterized by high levels of consideration for individuals and a high emphasis on task accomplishment.

Initiating Structure

A leadership behavior that focuses on defining and organizing work, establishing clear roles and responsibilities, and setting goals for the team or organization.