Question
Jensen & Meckling (1976) discuss a set of important conflicts between the stockholders and managers of a firm that create agency costs. Which of the
Jensen & Meckling (1976) discuss a set of important conflicts between the stockholders and managers of a firm that create agency costs. Which of the following statements correctly describe Jensen & Mecklings arguments about these agency issues?
(i) Managers are tempted to consume perquisites.
(ii) Mangers will tend to make more risky investment choices than stockholders.
(iii) Managers have incentives to retain funds in the firm rather than payout to shareholders.
Group of answer choices
Only (i) is true.
Only (i) and (II) are true.
Only (ii) and (iii) are true.
All three are true.
Only (i) and (iii) are true.
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