We study a model in which managers' disclosure and investment decisions are both endogenous and managers can manipulate their voluntary reports through (suboptimal) investment, financing or operating decisions. Managers are privately informed about the value of their firm and have incentives to...

Empirical evidence suggests that firms often manipulate reported numbers to avoid debtcovenant violations. We study how a firm's ability to manipulate reports affects the terms ofits debt contracts and the resulting investment and manipulation decisions that the firm implements.Our model...