We study the optimality of debt through the interaction between security design and information acquisition. An impatient seller designs a security backed by her asset in place and a buyer decides whether to buy the security in order to provide liquidity. Facing different securities, the buyer...

An issuer designs a contract and agents flexibly acquire information when deciding whether to accept it and provide liquidity. Unlike the existing literature, we do not impose any physical restriction on information structure to capture the idea of flexible information acquisition. Facing an...

We study optimal disclosure rules that alleviate inefficiencies caused by managerial private benefits. An entrepreneur raises capital from investors by designing a security and an associated covenant. The covenant allocates the control right of the project to the entrepreneur or investors in the...