We consider the problem faced by an issuer who wishes to design and issue a security backed by some exogenously given assets. The issuer has access to higher return investments and so has an incentive to raise capital by securitizing these assets. Because the issuer has private information...

This paper explores the information effect of financial risk management. Financial hedging improves the informativeness of corporate earnings as a signal of management ability and project quality by eliminating extraneous noise. Managerial and shareholder incentives regarding information...