Select as choices all of the following that you believe depict the 'agency' relationship inside the corporation.
Note: A correct answer requires that you check ALL that apply.
- In the context of the agency relationship managers are the principals.
- In the context of the agency relationship shareholders are the principals.
- The goal of shareholder wealth maximization often leads to agency costs.
- The compensation plan has many advantages but using it to reduce agency costs is NOT one of these advantages.
- One type of agency costs are lost opportunities caused by conflicts too difficult to resolve.
- The goals of the managers may not always align themselves with the goals of the shareholders.
- One of the goals of the study of modern corporate finance is to maximize agency costs.