We consider the provision of venture capital in a dynamic agency model. The value of the venture project is initially uncertain and more information arrives by developing the project. The allocation of funds and the learning process are subject to moral hazard. The optimal contract is a...

Convertible exchangeable preferred stock includes an option for the issuer to exchange the preferred for convertible bonds with identical pre-tax cash flows and conversion terms. In other respects this innovative corporate security is identical to traditional convertible preferred stock. The...

This paper studies the design and valuation of debt contracts in a general dynamic setting under uncertainty. By incorporating some insights of the recent corporate finance literature into a valuation framework, we obtain a model which seems promising for the empirical study of pricing of risky...

One often quoted reason for the incompleteness of financial markets is the fact that an informational asymmetry prevents entrepreneurs to float their company on the market. In fact, the privileged information that the owners have on their firms discourages rational financial investors and thins...

The paper explains why an issuer may wish to raise external capital by selling multiple financial claims that partition its total asset cash flows, rather than a single claim. It is shown that in an asymmetric information environment, the issuer's expected revenue is enhanced by such cash flow...

This paper studies the design and valuation of debt contracts in a general dynamic setting under uncertainty. By incorporating some insight of the recent corporate finance literature into a valuation framework, we obtain a model which seems promising for the empirical study of pricing of risky...