A lesson of the Enron collapse is that government regulation
A)always fails.
B)can reduce but not eliminate asymmetric information problems.
C)increases the problem of asymmetric information.
D)should be reduced.

Question

Quizplus · Accepted Answer

The Enron collapse highlighted the problem of asymmetric information, where managers had more information about the company than shareholders and stakeholders. Government regulation can reduce but not eliminate this problem, as evidenced by the numerous regulations in place to ensure corporate transparency and accountability. However, complete elimination of asymmetric information is difficult, if not impossible. Therefore, B is the best choice.

A Lesson of the Enron Collapse Is That Government Regulation