Agency Costs

In any investment, you as financial manager have give equal importance to the agency costs. The agency cost is the cost, which will be incurred by the corporate starting from the initiation of investment decisions to the completion of the investment process. The various agencies involved at different levels can be classified as

Pre-Implementation

Pre-Implementation levels will involves all the agencies, which will facilitate for the investment process of the corporate. The agencies involved at this stage for which the corporate need to pay are

• Brokers
• Builders
• Supply agents, both machinery & raw materials
• Market survey agents
• Project developers
• Technical support agents.

Implementation

The agents who facilitate the corporate during the implementation are called implementation level agents. They include

• Supple agents.
• Distributing agents
• Recovery agents
• Settlement agents

Post-Implementation

Agents who facilitate the corporate after the completion of investment process are called as post-implementation agents. They include

• Settlement agents.
• Brokers
• Facilitators
• Arbitrators
• Selling agents

You have to note that some of the agents will operate at single or in all levels of implementation. However, the cost involved in the payment for these agents of the investment of the corporate will have its effect on the cost. So, care have to be taken by you to see that these costs are to be controlled, it may affect the return on investment which needs to be distributed to all stakeholder of the corporate.