Having an audit performed on the company's financial statements best illustrates which of the following?
A)Cheap talk.
B)Signalling.
C)Moral hazard.
D)Information.

Question

Quizplus · Accepted Answer

Signalling is the correct answer because having an audit performed on a company's financial statements is a way for the company to signal to the market or its investors that it is financially healthy and transparent. This action helps reduce information asymmetry between the company and its stakeholders.

Having an Audit Performed on the Company's Financial Statements Best