Costs associated with producing financial statements and annual reports for investors and shareholders are examples of indirect agency costs.

Question

Quizplus · Accepted Answer

These costs are examples of direct agency costs, as they are expenses directly incurred from the efforts to support and maintain the relationship between shareholders and management. Indirect agency costs would involve things like lost opportunities due to management decisions that prioritize their interests over those of the shareholders.

Costs Associated with Producing Financial Statements and Annual Reports for Investors