Does government regulation help reduce this information

Reference no: EM133440553

Question: Consider that when firms sell stocks and bonds, they know much more about their true financial condition than do potential investors. Investors are reluctant to buy stocks and bonds issued by small and medium-sized firms because they lack sufficient information about these firms. Investors also worry about the moral hazard problem of firms misusing the funds they raise through the sale of stocks and bonds. Does government regulation (e.g., SEC) help reduce this information problem? Can it be resolved?

Reference no: EM133440553

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