describes a situation in which an agent misrepresents his or her ability to do the job. Moral hazard describes the difficulty of the principal to ascertain whether the agent has really put forth a best effort.

Match each type of governance concern to its corresponding example.

$1$

Information

$2$

Adverse selection asymmetry

$4$

Moral hazard

$5$

Agency theory

$3$

Principal$-$agent problem

Match each of the options above to the items below.

Stockholders' relationships with managers

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