In the context of agency theory,information asymmetry refers to the idea that
A) Information can vary in its reliability.
B) Information can vary in its relevance.
C) Management has more information about the entity's true financial position than do the absentee owners (i.e. stockholders).
D) Management likely will not act in the best interests of the absentee owners.

Question

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Information asymmetry in agency theory refers to the situation where management possesses more information about the company's true financial position than the absentee owners, leading to potential issues in decision-making and trust.

In the Context of Agency Theory,information Asymmetry Refers to the Idea