Which of the Following Statements Is Not Consistent with Agency

question 29

Multiple Choice

Which of the following statements is not consistent with agency theory:

• A) Entities employ managers to conduct business on their behalf and to negotiate contracts with other parties.
• B) Managers are more likely to favour the interests of debtholders than those of shareholders in managing debt contracts.
• C) Managers will not always act in the best interest of shareholders.
• D) There are costs incurred in order to control agent's behaviour.

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Definitions:

Standard Normal

A special case of the normal distribution used in statistical analysis where the mean is 0 and variance is 1.

Area

The extent or measurement of a surface, typically measured in square units.

Normal Distribution

A bell-shaped distribution that is symmetrical about the mean, describing how the values of a variable are spread or distributed.

Mean

A statistical measure representing the central or typical value in a set of data, often understood as the common "average".