A continuous-time agency model of optimal contracting and capital structure
In: NBER working paper series 10615
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In: NBER working paper series 10615
In: NBER working paper series 10891
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In: Journal of political economy, Volume 114, Issue 4, p. 774-815
ISSN: 1537-534X
In: Pearson Studium - Economic BWL
In: Pearson series in finance
In: Journal of political economy, Volume 100, Issue 1, p. 41-61
ISSN: 1537-534X
In: Journal of political economy, Volume 100, Issue 1, p. 41
ISSN: 0022-3808
In: American economic review, Volume 109, Issue 6, p. 2173-2207
ISSN: 1944-7981
We analyze test design and certification standards when an uninformed seller has the option to generate and disclose costly information regarding asset quality. We characterize equilibria by a minimum principle: the test and disclosure policy are chosen to minimize the asset's value conditional on nondisclosure. Thus, when sellers choose the information provided, simple pass/fail certification tests are likely to dominate the market. A social planner could raise informational and allocative efficiency, and lower deadweight testing costs, by raising the certification standard. Monopolist certifiers also satisfy the minimum principle but set a higher standard and reduce testing rates to maximize revenue. (JEL D42, D83, L12, L15)
In: American economic review, Volume 95, Issue 4, p. 936-959
ISSN: 1944-7981
We study security-bid auctions in which bidders compete for an asset by bidding with securities whose payments are contingent on the asset's realized value. In formal security-bid auctions, the seller restricts the security design to an ordered set and uses a standard auction format (e.g., first- or second-price). In informal settings, bidders offer arbitrary securities and the seller chooses the most attractive bid, based on his beliefs, ex post. We characterize equilibrium and show that steeper securities yield higher revenues, that auction formats can be ranked based on the security design, and that informal auctions lead to the lowest possible revenues.
In: NBER Working Paper No. w16485
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