Question

Giving the company's CEO stock options as part of his or her compensation package is an example of an agency cost.

Select one:

a. True

b. False

Answer 1

This Statement is True
Agency Cost- It refers to a loss of firm value as a result of conflict of interest between shareholders and management.
When an Management do unnecessary expenses, increase operating cost and to benefit to shareholsers wealth.
Agency cost example - Travelling Expense , higher packages etc

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