Dow, James (contributor); Raposo, Clara C. (contributor) - 2005
an ex ante contract, shareholders commit to rule out
renegotiation. Both in the initial negotiation and in the event of …
strategy B. Let m
B
be the contractual payment in the event that the firm is
worth V. Incentive compatibility requires
m
B
π
B … event that the firm is worth V, and it can be
renegotiated later when the strategy is decided, if doing so is mutually agree …