Agency Costs of Increased Debt in Capital Structure

XYZ Corporation is currently reviewing its capital structure as it contemplates a new project that requires significant financing. The firm’s current management team is keen to pursue aggressive growth strategies that may involve additional debt. However, the firm's board members have expressed concerns about the potential agency costs resulting from increased manager discretion in capital allocation. The board believes that such discretion could lead to conflict between management and shareholders as managers might prioritize personal interests over shareholder value. The previous financing approach favored equity financing, as the management team had a stake in maintaining company cash flows to drive their bonuses and personal wealth. With this context in mind, what is the main agency cost associated with shifting to a higher debt capital structure?