In general, there are four categories of real or opportunity costs incurred by shareholders designed to prevent, mitigate, or correct management–shareholder agency conflicts. they are: 1. expenditures to minimize management’s desire to act contrary to the best interests of shareholders 2. expenditures to monitor management’s activities 3. expenditures to provide a bond against management dishonesty 4. the opportunity cost of lost profits consider the following situation and identify both the category of the expenditure and the best device that might be used to prevent, reduce, or correct the agency conflict: a firm’s president and management team are all buddies and run the organization to make the president look good in the wall street journal.