In this problem we merge two models of disclosure considered in the lecture. The manager maximizes...
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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 of r. The market does not observe z. The manager can discloser to the market paying c € (0, 1). When firm's value z is disclosed the market assigns value to the firm, and if no disclosure occurs observes the lack of disclosure. but not r. Find equilibrium disclosure strategy. 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 of r. The market does not observe z. The manager can discloser to the market paying c € (0, 1). When firm's value z is disclosed the market assigns value to the firm, and if no disclosure occurs observes the lack of disclosure. but not r. Find equilibrium disclosure strategy.
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In this problem the manager is trying to maximize the expected value of the firm from the markets ... View the full answer
Related Book For
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
Posted Date:
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