Optimal security design under asymmetric information and profit manipulation

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Koufopoulos, Kostas; Kozhan, Roman; Trigilia, Giulio;
(2014)
  • Publisher: University of Warwick. Department of Economics
  • Subject: HG

We consider a model of external financing under ex ante asymmetric information and profit manipulation (non verifability). Contrary to conventional wisdom, the optimal contract is not standard debt, and it is not monotonic. Instead, it resembles a contingent convertible... View more
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