Since crowdfunding sites do not themselves invest in business start ups that raise funds on their sites,they don't reduce
A) the principal-agent problem.
B) information costs.
C) transactions costs.
D) asymmetric information.

Question

Quizplus · Accepted Answer

Crowdfunding sites primarily serve as platforms to connect entrepreneurs with a large number of potential investors. They do not directly invest in the startups themselves, nor do they take an active role in management. Therefore, they do not inherently reduce the principal-agent problem, which arises from the potential conflict of interest between the managers of a company (agents) and its shareholders (principals). The principal-agent problem involves issues like agents pursuing their own interests over those of the principals, and since crowdfunding platforms do not involve themselves in the management or decision-making processes of the businesses they help fund, they do not mitigate this issue.

Since Crowdfunding Sites Do Not Themselves Invest in Business Start