Asymmetric information implies that ________ may have better information about a firm's cash flows than other stakeholders.
A) debt holders
B) suppliers
C) managers
D) creditors

Question

Quizplus · Accepted Answer

Asymmetric information means that one party has access to information that other parties do not have. In the case of a firm's cash flows, managers are likely to have better information than other stakeholders such as debt holders, suppliers, or creditors because they are responsible for managing the day-to-day operations of the company and have access to detailed financial information. This can create a situation where managers have an incentive to use this information to their advantage, potentially at the expense of other stakeholders.

Asymmetric Information Implies That ________ May Have Better Information About