Agency costs


 

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Agency costs

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



Agency costs

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Agency

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A relationship created when one person (the principal) delegates to another (the agent) the fight to act on his or her behalf in business transactions.


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The argument that specifies that the various agency costs create a complex environment in which total agency costs are at a minimum with some, but less than 100%, debt financing.


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