Because information asymmetry exists between the management (and directors)of a company and its shareholders,shareholders are kept fully informed of the company's future prospects.

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Information asymmetry means that one party (in this case, management and directors) has more information about the company than the other party (shareholders). This can lead to shareholders not being fully informed or aware of the company's future prospects. To address this, companies typically have disclosure and reporting requirements to provide information to shareholders, but it does not guarantee that shareholders are fully informed.

Because Information Asymmetry Exists Between the Management (And Directors)of a Company