Question: Refer to Example 9.3. Show calculations to verify the statement in the example that with a profit share of 0.3185 the manager will work hard

Refer to Example 9.3. Show calculations to verify the statement in the example that with a profit share of 0.3185 the manager will work hard and receive reservation utility.
Explain why the contract in Example 9.3 is more efficient than the contract in Example 9.2. How can accountants contribute to this greater efficiency when net income is unbiased?

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The managers expected utility for a1 is EU a 0608462 3185110 01538 3185 45 0401538 3185110 08462 318... View full answer

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