18-3. Incentive Conflicts Which of the following are characteristic of principal–agent conflicts that often exist in a firm? (Note: The entire statement must be true in order to be a correct answer.)

a. Managers do not always operate in the best interest of owners because owners are generally more risk-averse than managers.

b. Managers generally have a shorter time horizon than owners; thus, managers do not fully take into account the future long-run profitability of the firm.

c. Managers do not always operate in the best interest of owners because managers care about the noncash benefits of their jobs.

d. Firms can usually find solutions that reduce agency costs without increasing monitoring or bonding costs.