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Which of the following is not true? The agency problem arises when the principal (i.e. the employer) hires someone to do certain job for him/her,
Which of the following is not true? The agency problem arises when the principal (i.e. the employer) hires someone to do certain job for him/her, and the employed person has an incentive to act in a manner that will hurt the principal's (employer's) interests. Corporations are subject to double taxation, meaning that owners of a corporation will pay taxes twice by paying the corporation income tax and individual income tax separately. Debtholders get ownership interests in the firm in exchange of the money they lent immediately after lending money to the firm, regardless of whether the firm defaulted or not. Partnerships are subject to double taxation
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