• Publications
  • Influence
Optimal Security Design and Dynamic Capital Structure in a Continuous‐Time Agency Model
We derive the optimal dynamic contract in a continuous‐time principal‐agent setting, and implement it with a capital structure (credit line, long‐term debt, and equity) over which the agent controlsExpand
The Pooling and Tranching of Securities: A Model of Informed Intermediation
I show that when an issuer has superior information about the value of its assets, it is better off selling assets separately rather than as a pool due to the information destruction effect ofExpand
A liquidity-based model of security design
The authors consider the problem of design and sale of a security backed by specified assets. Given access to higher-return investments, the issuer has an incentive to raise capital by securitizingExpand
Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Socially Expensive
We examine the pervasive view that "equity is expensive," which leads to claims that high capital requirements are costly and would affect credit markets adversely. We find that arguments made toExpand
Persuasion Bias, Social Influence, and Unidimensional Opinions
We propose a boundedly rational model of opinion formation in which individuals are subject to persuasion bias; that is, they fail to account for possible repetition in the information they receive.Expand
Optimal Long-Term Financial Contracting
We develop an agency model of financial contracting. We derive long-term debt, a line of credit, and equity as optimal securities, capturing the debt coupon and maturity; the interest rate and limitsExpand
Corporate Incentives for Hedging and Hedge Accounting
This article explores the information effect of financial risk management. Financial hedging improves the informativeness of corporate earnings as a signal of management ability and project qualityExpand
Dynamic Agency and the Q Theory of Investment
We develop an analytically-tractable model integrating the dynamic theory of investment with dynamic optimal incentive contracting, thereby endogenizing financing constraints. Incentive contractingExpand
Agency and Optimal Investment Dynamics
Agency problems limit firms' access to capital markets, curbing investment. Firms and investors seek contractual ways to mitigate these problems. What are the implications for investment? We presentExpand