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Agency costs

• The incremental costs of having an agent make decisions for a principal.

• Costs borne by shareholders to prevent or minimize agency problems and to contribute to the maximization of the owners' wealth. They include monitoring and bonding expenditures, opportunity costs, and structuring expenditures.

 
 

Follow this link for all the terms related to cost.

 
 Embedded terms in definition
 Agency problem
Agency
Agent
Opportunity cost
Principal
Shareholders
Structuring
 
 Related Terms
 

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