An audit is one way for investors to insure against at least part of their loss should the company they invest in fail - this is an example of
A) agency theory.
B) information hypothesis.
C) insurance hypothesis.
D) competing incentives.

Question

Quizplus · Accepted Answer

The statement describes how an audit can provide a form of insurance against potential losses for investors. This aligns with the insurance hypothesis, which suggests that auditing serves as a means for stakeholders to insure against losses resulting from misstatements or fraudulent activity.

An Audit Is One Way for Investors to Insure Against