agency cost of equity

[keep_running]

This is what I have listed as the three components for the agency cost of equity:

1. monitoring costs (borne by the shareholders/principal)

2. bonding costs (borne by the management/agent)

3. Higher financial leverage lowers agency costs because there is less agency cost potential with less FCF outstanding/.

Does this cover all three components of agency costs? This is what I read in the book.

[ethanscott]

@keep\_running

This is what I have listed as the three components for the agency cost of equity shares:

1. monitoring costs (borne by the shareholders/principal)

2. bonding costs (borne by the management/agent)

3. Higher financial leverage lowers agency costs because there is less agency cost potential with less FCF outstanding/.

Does this cover all three components of agency costs? This is what I read in the book.

I think this covers it all. Could you tell me which book are you referring?

I could use some material. Planning to read it myself.

Thanks!