Agency Costs and Increased Leverage

Maria is the Chief Financial Officer (CFO) of a mid-sized corporation. Recently, she observed that her firm has issued a significant amount of debt. As a result, she is concerned about the potential agency costs that may arise due to the different interests of the stakeholders involved, particularly between equity holders and debt holders. Maria is considering the implications that a higher level of leverage may have on the management's decision-making and potential risk-taking behavior.

Agency costs generally refer to the costs associated with resolving conflicts of interest among stakeholders, particularly between managers and shareholders or between shareholders and debt holders. Given this context, which of the following statements accurately describes a consequence of increased leverage?