We analyze the real option signaling game models of debt financing of a risky project under information asymmetry, where the firm quality is only known to the firm management but not outsiders. The firm decides on the optimal investment timing of the risky project that requires upfront fixed...

I utilize bondholder wealth e ffects to test theories of why voluntary bank debt renegotiation happens without any default. Bondholders react positively to renegotiations that relax loan covenants, consistent with Gârleanu and Zwiebel (2009) that lenders transfer control rights back to the fi...

We develop the real option signaling games models of equity financing of a risky project under asymmetric information, where the firm quality is known to the firm management but not outside investors. Unlike the usual assumption of perpetuity of investment, we assume that the time window of the...