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Investments glossary

Agency Costs

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Quotes of the day:

Truth may be stretched, but cannot be broken, and always gets above falsehood, as does oil above water.

— Miguel Cerbantes

An agency cost is a type of internal company expense which comes from the actions of an agent acting on behalf of a principal. Agency costs typically arise in the wake of core inefficiencies, dissatisfactions and disruptions, such as conflicts of interest between shareholders and management. Payment of the agency cost is to the acting agent.



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