All of the following statements about agency problems are true EXCEPT
A) Agency problems interfere with the goal of maximizing shareholder value.
B) Agency costs are paid by the managers who do not act in the shareholders' best interest.
C) Agency problems result from the separation of management and the ownership of a firm.
D) The root cause of agency problems is conflicts of interest.

Question

Quizplus · Accepted Answer

Agency costs are actually paid by the shareholders, not the managers. The managers are the ones who create agency costs by taking actions that do not align with the shareholders' best interests.

All of the Following Statements About Agency Problems Are True