The agency costs that an MNC is exposed to can be reduced by raising equity capi

ID: 2653824 • Letter: T

Question

The agency costs that an MNC is exposed to can be reduced by raising equity capital in a foreign country where it operates because:

foreign equity can be used to provide incentives to foreign managers, thereby aligning the interests of the MNC and their foreign managers.

foreign countries will be reluctant to take action that will damage a firm that have raised equity capital in the country.

equity markets will oversee regulation of firms that have raised equity in countries where the equity markets operate.

equity instruments are much more appealing investments than debt instruments.

foreign equity can be used to provide incentives to foreign managers, thereby aligning the interests of the MNC and their foreign managers.

foreign countries will be reluctant to take action that will damage a firm that have raised equity capital in the country.

equity markets will oversee regulation of firms that have raised equity in countries where the equity markets operate.

equity instruments are much more appealing investments than debt instruments.

foreign equity can be used to provide incentives to foreign managers, thereby aligning the interests of the MNC and their foreign managers.

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