Answer to Question #191258 in Finance for Animesh Gautam

Question

explain in two ways how a company can limit the agency cost through the payment of dividends.

Answer 1

The agency issue occurs when a company's executives behave in their own best interests rather than concentrating on the company's goals. There is a connection between dividend policies and organizational agency issues.

The agency problem occurs when a company's management behave in their own best interests rather than concentrating on the company's goals. There is a connection between dividend policies and organizational agency issues.