Which of the following is an agency cost from a business owner's perspective?
A) Losses from poor economic conditions
B) Costs to provide appropriate incentive contracts for top management
C) General supplier price increases
D) Insufficient executive pay

Question

Quizplus · Accepted Answer

Agency costs are expenses incurred to ensure that managers act in the best interest of the owners. Providing incentive contracts is a way to align management's interests with those of the owners, thus it is considered an agency cost.

Which of the Following Is an Agency Cost from a Business