An Example of a Direct Agency Cost Is

question 33

Multiple Choice

An example of a direct agency cost is:

• A) a manager turning down a value-contributing project because of its risks.
• B) a manager expensing a large dinner on the company expense report.
• C) a manager using too little debt within the company's capital structure because of the additional risk associated with debt.
• D) all of the above.

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Definitions:

Constraint Commitment

The commitment to a course of action or to another person based on a sense of obligation arising from constraints or limitations.

Moral Commitment

The dedication to act in accordance with one's ethical principles and values, even in the face of personal cost or challenge.

Personal Dedication

A person's commitment or strong belief in dedicating themselves to a cause or activity.

Reciprocal Liking

The phenomenon where people tend to like others who show that they like them in return.