Agency costs are-‒‒‒‒‒‒O costs that managers bear when they do not act in the interests of shareholdersO costs that shareholders bear because managers pursue their own interests rather than acting in the interestsof shareholdersO costs that firms must pay to comply with the regulations imposed by federal government agenciesO costs that are exempt from taxation

Corporate governance refers to the set of rules, processes, and laws by which companies are…

Answered: Agency costs are 1111' O costs that…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter1: The Role And Objective Of Financial Management

Section: Chapter Questions

Problem 8QTD

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1. Which of the following best describes agency cost?A) Costs involved with any effort to minimize the conflict between the principal's interest and the 2/3.B) Cost incurred by an agent to facilitate the creation of an agency relationship with theirprincipal.C) Cost incurred by a principal to establish an agency.D) Agency costs are irrelevant costs that are not measurable nor recognized in the face of the Financial Statement and is therefore not a cost to a company. in the long-term. 2. Which of the following is a valid reason why Financial Managers should put emphasis on long-term growth rather than short-term profit maximization?A) A manager should focus on profit maximization because it adds to the wealth of shareholdersB) A manager should focus on long-term growth because short-term profit maximization does not add to the wealth of shareholders on the long-term.C) There is no difference between focusing on short-term profit maximization and emphasis on agents interestD) Emphasis…
Agency cost arise from the senior management's inability to control shareholder true or False. State
Accounting purpose of Governmental and not-for-profit organizations are different from business organizations due to the following reasons EXCEPT: a. Different purposes in society O b. Financed by resource providers who do not expect benefits proportional to the resources they provide c. Management has a special duty to be accountable for how resources are used in providing services O d. Accountable to the stakeholders of an organization
Agency costs are best defined as: O The cost of conflict between the banks and shareholders * O The cost of conflict between the creditors and shareholders O The cost of conflict between the board of directors and creditors The cost of conflict between the board of directors and shareholders
Q5) Agency costs are _______ costs that are paid to ____ acting on behalf of the principal to minimise the conflict of interests between the two parties. Group of answer choices a) internal, shareholders b) external, shareholders c) internal, managers d) external, managers
1.The IASB sets standards for: a. The private sector b. The public and private sectors c.The public, private and not-for-profit sector d. The private and not-for-profit sector 2. Which of these is not one of the benefits of a Conceptual framework? a. Reporting requirements will be more Consistent and logical b. It may allow firms to reduce their reported profit c. The need for specific accounting standards should be reduced d. Standard setting boards will be more accountable for their actions
What is meant by the 'Agency problem' in the context of a Public Limited Company? How is it possible for the Agency Problem to be reduced in a company?
What type of organization primarily offers tax compliance, auditing, and consulting services? A. corporations B. public accounting firms C. governmental entities D. universities
Which one is false? A. The agency is defined as a relationship by consent between two parties, whereby one party agrees to act on behalf of the other B. Agency theory assumes that a conflict of interest exists between the owners of a firm and the managers C. Generally agency costs of a firm are not controlled by firm itself D. Financial reporting may provide the information for the potential agency costs of the firm
The requirements imposed by parties outside the company like the difference governmental institutions can also have an impact on the entity's control environment. TRUE OR FALSE? WHY?
A forprofit business has a focus on profit and loss and follows GAAP regulations A government entity follows GASB regulations A government entity will have focus on what is being done with the funds received and recommendations for improvement are usually not given Whereas a forprofit entity will be reviewed for how revenue is being recognized and if they follow GAPP regulations and recommendations are given on how to improve compliance with GAAP
The following questions are about corporate governance and executive compensation: (a) How does agency theory address the issue of executive compensation? (b) How might stakeholder theory argue against the current model of executive compensation in the United States? (c) What is meant by the statement, “Compensation systems always become in part end and not simply means”?

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