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Which of the following statements is FALSE regarding agency cost of debt? 1 One disadvantage of using leverage is that it does not allow the
Which of the following statements is FALSE regarding agency cost of debt? 1 One disadvantage of using leverage is that it does not allow the original owners of the firm to maintain their equity stake. 2 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. 3 Managers also have their own personal interests, which may differ from those of both equity holders and debt holders. 4 The costs of reduced effort and excessive spending on perks are another form of agency cost
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