In principle,the information advantages of a diversified company mean that internal capital markets are more efficient than external capital markets,but in practice internal capital markets tend to allocate funds to subsidise poor performing subsidiaries.

Question

Quizplus · Accepted Answer

Internal capital markets can suffer from inefficiencies such as agency problems and lack of transparency, leading to suboptimal allocation of resources to underperforming subsidiaries.

In Principle,the Information Advantages of a Diversified Company Mean That