Question
According to agency theory, the existence of debt imposes agency costs. Required: a. What are agency costs? b. Explain why an increase in debt would
According to agency theory, the existence of debt imposes agency costs.
Required: a. What are agency costs?
b. Explain why an increase in debt would increase agency costs and what the resulting effect would be for debt holders.
c. What strategy might debt holders utilize to counter potential adverse agency effects?
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Auditing & Assurance Services
Authors: Timothy Louwers, Penelope Bagley, Allen Blay, Jerry Strawser, Jay Thibodeau
8th Edition
978-1260703733, 1260703738
