In this problem we merge two models of disclosure considered in the lecture. The manager maximizes the expected value of the firm from the market's viewpoint. The firm's value is a random variable ~ U[0, 1]. With probability p < 1 the manager privately observes the realization of x, and with probability 1 p stays uninformed about the true realization

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Related Book For  answer-question

Introduction to Corporate Finance

2nd edition

Authors: Scott B. Smart, William L Megginson

ISBN: 978-0324657937