Question
Which of the following statements is FALSE? A. Managers also have their own personal interests, which may differ from those of both equity holders and
Which of the following statements is FALSE?
A.
Managers also have their own personal interests, which may differ from those of both equity holders and debt holders.
B.
The separation of ownership and control creates the possibility of management entrenchment; facing little threat of being fired and replaced, managers are free to run the firm in their own best interests.
C.
One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake.
D.
The costs of reduced effort and excessive spending on perks are another form of agency cost.
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