The introduction of deal types for issues of seasoned equity in which the offer follows quickly after the announcement highlights the role of underwriter certification in the performance of SEOs. Controlling for the matching between underwriters and issuing firms, we find that the quality of the...

A Principal-Agent model in which the principal and the agent are ambiguity averse is examined. A novel role for the optimal contract is to induce a speci c partition of the state space for the agent as a means of manipulating the ambiguity he faces, thereby providing more efficient contracting....

A Principal-Agent model is examined in which the principal and the agent are ambiguity averse. With a risk neutral principal and a risk averse agent the presence of ambiguity aversion implies that the principal will not always fully insure the agent when effort is observable. Instead, risk may...

We examine the importance of ambiguity, or Knightian uncertainty, in the capital structure decision. We develop a static tradeoff theory model in which agents are both risk averse and ambiguity averse. The model confirms the usual idea that increased risk—the uncertainty over known possible...

We examine the impact of ambiguity, or Knightian uncertainty, on the capital structure decision, using a static tradeoff theory model in which agents are both ambiguity and risk averse. The model provides the well-known result that greater risk---the uncertainty over outcomes---leads firms to...

The new issues market is used to examine the impact of ambiguity and ambiguity aversion on the pricing of financial assets. An IPO process is modeled assuming ambiguity regarding the returns on financial assets and risk and ambiguity aversion on the part of agents. Theoretically, the underwriter...

We derive a model of bond pricing under ambiguity, showing that ambiguity interacts with risk to determine spreads. Since default is an inherently "unfavorable" outcome, ambiguity-averse bondholders overweigh its probability and demand higher yields for bonds with higher ambiguity.Empirically,...

The introduction of deal types for issues of seasoned equity in which the offer follows quickly after its announcement highlights the role of underwriter certification in the performance of SEOs. Controlling for the matching between underwriters and issuers, underwriter quality is positively...