Which of the following concepts holds that voluntary disclosure is necessary in order for a firm to compete successfully in the market for risk capital?

Question

Quizplus · Accepted Answer

Signalling theory holds that voluntary disclosure is necessary in order for a firm to signal positive information to potential investors and compete successfully in the market for risk capital. Agency theory focuses on the conflicts that arise between principals (shareholders) and agents (managers) and how to align their interests. Information symmetry refers to a situation in which all parties in a transaction have equal knowledge of the relevant information. Private contracting involves parties negotiating and agreeing on terms of a contract without external interference.

Which of the Following Concepts Holds That Voluntary Disclosure Is