The firm's chief executive officer has had secret talks with a competitor about the possibility of a merger in which she would become the CEO of the combined firms. Which of the following statements correctly identifies the cost and possible solution for the agency problem in this case?(Choose all correct responses.)

A.

One agency cost is that the CEO may negotiate a deal with the merging competitor that is extremely beneficial to herself at the expense of selling the firm for less than its fair market value.

B.

A good way to reduce the loss of shareholder wealth would be to open the firm up for purchase bids from other firms once the manager makes it known that the firm is willing to merge.

C.

An open bidding process may encourage other firms to offer a price closer to the fair market value of the firm.

D.

There is no agency cost. Secrecy must be maintained in order to get the best possible price for the firm.