When information asymmetry exists between firms that currently own assets and firms that may want to purchase these assets, the selling firm will often have difficulty obtaining the full economic value of these assets.

Question

Quizplus · Accepted Answer

Information asymmetry can cause potential buyers to undervalue assets because they do not have complete information on the assets' value or potential risks. This can result in the selling firm receiving less than the full economic value of their assets.

When Information Asymmetry Exists Between Firms That Currently Own Assets