Briefly Explain How an Increase in the Amount of Debt

question 6

Essay

Briefly explain how an increase in the amount of debt that a company has outstanding may actually decrease the agency costs caused by the conflict between managers and shareholders.

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Definitions:

Ethical Principles

Fundamental guidelines that inform ethical decision-making and conduct in various fields.

Conflicting Principles

Circumstances where two or more fundamental rules or beliefs are at odds with each other, making a situation difficult to navigate.

Ethical Decision

A decision-making process that involves evaluating and choosing among alternatives in a manner consistent with ethical principles.

Ethical Pluralism

The belief that there are multiple ethical principles or values that can be equally correct and fundamental in assessing moral questions, rejecting the idea of one universal moral truth.