Kizspy | Question: 24
(Choose 1 answer)
The use of debt financing:
A. reduces agency costs between the stockholders and management by increasing the amount of risk the managers take.
B. increases agency costs between the stockholders and management by limiting the amount of risk the managers take.
C. increases agency costs since managers prefer to keep less retained earnings to make dividend payments.
D. increases agency costs between the stockholders and management by limiting the amount of risk the managers take, and increases agency costs since managers prefer to keep more retained earnings to make dividend payments.
