In this article we propose a security-design problem in which risk neutral entrepreneurs make unobservable investment decisions while employing the investment funds of risk-neutral outside investor/creditor(s). Contracts are restricted to satisfy limited liability and monotonicity of the payment...

Motivated by the informational 'opacity' that often characterizes small firms, this article studies a security design problem in which outside investors are unable to observe entrepreneurs' investments decisions and their firms' net-worth, both before and after contracts are signed. The...

This paper is a supplement to Ghossoub [11]. In this supplement, some of the results of Ghossoub [11], as well as the techniques used to obtain these result are extended to a more general problem of demand for contingent claims with belief heterogeneity. Moreover, a general problem of monotone...

We introduced in this study a model of sovereign debt with an embedded Down-and-In Put (DIP) to capture the discontinuity in sovereign debt pricing. This study suggests that debt forgiveness is a more effective solution in debt crisis, as repayment bonus or award or capital market exclusion...

This article presents a new capital structure model based on four factors well documented in literature: asymmetric information, taxes, bankruptcy costs and decision-makers' overconfidence. The model can simultaneously explain several facts about capital structure including those that remain...

In this article we analyze the remuneration mechanism for the reduction of energy losses, through a dynamic principal-agent model in continuous time. The agent represents the power distribution company, which makes investments, or in other words, makes an effort to reduce energy losses. The...

A Company's Brand image is an intangible asset. Though Initial Public Offerings (IPOs) try to capture Brand Value, a company's share value is a result of several factors like performance, initial capital, investor identity etc. Moreover, time needed for a company to be listed runs into several...

In this article we analyze the remuneration mechanism for the reduction of energy losses, through a dynamic principal-agent model in continuous time. The agent represents the power distribution company, which makes investments, or in other words, makes an effort to reduce energy losses. The...

In this article we argue that asymmetric information can explain why seignorage is an inferior choice to debt for governments. We also argue that the Ricardian equivalence for governments is very similar to what the Modigliani-Miller proposition is for corporations. Our model is based on Bolton...

We provide empirical evidence of both (1) price dispersion and (2) credit rationing in the corporate loan market. We argue that these properties are caused by two factors: an adverse selection resulting from the information asymmetry between lenders and borrowers, and search frictions in...