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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.

 
 

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 Embedded terms in definition
 Agency problem
Agency
Agent
Opportunity cost
Principal
Shareholders
Structuring
 
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If you have an important point to make, don't try to be subtle or clever. Use a pile driver. Hit the point once. Then come back and hit it again. Then hit it a third time - a tremendous whack. - Winston Churchill, Sir (1874-1965)

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