Agency Costs – NBC Institute

BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

Question

Agency costs are the costs that the shareholders incur when professional managers run their company. Which of the following is NOT part of agency costs?
A. Costs of auditing accounts of the company
B. Remuneration paid to managers of the company
C. Cash bonuses paid to managers for meeting specified targets
D. Costs incurred paying too much for the acquisition of a subsidiary
E. Award of free shares to management of the company

Answer

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Tags: Agency Costs, Management Compensation, Shareholders
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2020

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

Question

NSL’s current corporate governance structure consists of three executive directors and one non-executive director, with the CEO serving as the chairman of the board. The board, as presently constituted, may have its strengths and weaknesses.

Required:
i) State and explain TWO (2) agency costs that the company would avoid as postulated by Agency Theory of corporate governance that “agency costs do not exist when the owners and the managers are exactly the same individuals.”
(5 marks)

ii) Explain TWO (2) roles that the non-executive director, Daniel Aidoo, ought to play on the board as identified by the document, Higgs Guidance (2003), to strengthen NSL’s board.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Costs, Corporate Governance, Higgs Guidance, Non-Executive Directors
Level: Level 3

Topic: Professional practice and codes of ethics
Series: NOV 2023

BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Costs, Management Compensation, Shareholders
Level: Level 1

Topic: The Role of Professional Accountants in Business and Society
Series: NOV 2020

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

Question

ii) Explain TWO (2) roles that the non-executive director, Daniel Aidoo, ought to play on the board as identified by the document, Higgs Guidance (2003), to strengthen NSL’s board.
(5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Agency Costs, Corporate Governance, Higgs Guidance, Non-Executive Directors
Level: Level 3

Topic: Professional practice and codes of ethics
Series: NOV 2023

Question Tag: Agency Costs

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BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

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BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

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SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

You're reporting an error for "SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics"

BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society

Identify the item that is NOT considered an agency cost.

You're reporting an error for "BMF – Nov 2020 – L1 – SA – Q14 – The Role of Professional Accountants in Business and Society"

SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics

Understanding agency costs avoided by NSL and the role of the non-executive director as per Higgs Guidance.

You're reporting an error for "SCS – Nov 2023 – L3 – Q6a – Professional Practice and Codes of Ethics"

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