When Shareholders Pursue Selfish Strategies Such as Taking Large Risks

Multiple Choice

When shareholders pursue selfish strategies such as taking large risks or paying excessive dividends,these will result in:

A) undertaking scale enhancing projects.
B) investments of the same risk class that the firm is in.
C) positive agency costs, as bondholders impose various restrictions and covenants, which will diminish firm value.
D) no action by debtholders since these are equity holder concerns.
E) lower agency costs, as shareholders have more control over the firm's assets.