The name economists give the process by which stockholders gather information by frequent monitoring of the firm's activities is
A)costly state verification.
B)the free-rider problem.
C)costly avoidance.
D)debt intermediation.

Question

Quizplus · Accepted Answer

The process of stockholders frequently monitoring the firm's activities in order to gather information is known as costly state verification. This is because it is costly for stockholders to acquire and verify information on the firm's activities, but they do it to ensure that the managers are not misusing their resources.

The Name Economists Give the Process by Which Stockholders Gather