By agency costs one understands the costs, which must be applied by asymmetrical information and their avoidance in the principle aluminum agent theory.

Agency costs consist of three components:

1. Control /Kontrollkosten: They represent the efforts Prinzipals toward the decrease of the own information disadvantage.
2. Signaling costs (warranty costs): They represent the efforts of the agent toward the decrease of information asymmetries.
3. Residualkosten/remaining welfare loss: Deviation from the ideal condition with symmetrical information, costs of the missed optimum.

Articles in category "Agency costs"

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