Which of the following statements is not consistent with agency theory:
A) Entities employ managers to conduct business on their behalf and to negotiate contracts with other parties.
B) Managers are more likely to favour the interests of debtholders than those of shareholders in managing debt contracts.
C) Managers will not always act in the best interest of shareholders.
D) There are costs incurred in order to control agent's behaviour.

Question

Quizplus · Accepted Answer

This statement is not consistent with agency theory because it suggests that managers would favour debtholders over shareholders, while agency theory suggests that managers may prioritize their own interests over those of shareholders.

Which of the Following Statements Is Not Consistent with Agency