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 not paid by the managers who do not act in the shareholders' best interest, but by the shareholders themselves. The managers who do not act in the shareholders' best interest, however, may benefit from those costs.

All of the Following Statements About Agency Problems Are True