Which of the following concepts explains why firms have an incentive to report voluntarily to the market even if there were no mandatory reporting requirements?

Question

Quizplus · Accepted Answer

Signalling theory suggests that firms have an incentive to voluntarily report information to the market to signal their quality and reliability to stakeholders. This can lead to increased investor confidence and improved market performance for the firm.

Which of the Following Concepts Explains Why Firms Have an Incentive