FIN 3715 Chapter : FIN 3716
Document Summary
Suppose you are planning to hire someone to sell your car. Which of the following will make sure you get highest possible price of your car? option 1: playing a flat fee option 2: offering a commission of say, 10% if sakes price. Direct agency cost: corporate expenditure that benefits management but cost the stockholder such as a corporate jet, paying outside auditors to assess the accuracy of finanaical statement information. Indirect agency cost more costly- effects the long term*** The owners of the firm will wish to take an investment because the stock value will rise, but management may not because there is possibly that things will turn out badly and management jobs will be lost.
