Question: Which could NOT help us reduce the agency problem? Issuing debt with strict covenants could help to reduce the agency cost between shareholder and debtholder.

  1. Which could NOT help us reduce the agency problem?
    1. Issuing debt with strict covenants could help to reduce the agency cost between shareholder and debtholder.
    2. Issuing debt and paying dividend could help to reduce the agency cost between shareholder and debtholder.
    3. Having higher dual-holders ownership (bondholders also purchase stocks) could mitigate agency cost between shareholder and debtholder.
    4. Issuing debt and paying dividend could help to reduce the agency cost between shareholder and manger.

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