Figure 5 - uploaded by Graeme Guthrie
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... equals the sum of the asset value if a takeover is impossible, x, and the shareholders' portion of the increase in the firm's value under new management, xθ max{0, (1−γ)ˆ z * R −(1−φ)}, less the disruption costs, φx. This behavior is evident in Figure 5, which plots the value of the firm's shares during the period between the CEO investing and the takeover occurring. The part of each curve to the left of the dot shows the value of the firm's shares in the region where a takeover occurs immediately. ...
