This paper aims to clarify how contingent convertible bond (CCB) as a debt financing instrument affects the firm's investment policy, agency cost of debt and capital structure. We consider two different conversion thresholds of CCB: One is endogenous and the other is exogenous. We find that...

We study the impact of stochastic interest rates and capital illiquidity on investment and firm value by incorporating a widely used arbitrage-free term structure model of interest rates into a standard q theoretic framework. Our generalized q model informs us to use corporate credit-risk...

This paper addresses the investment and financing decisions of entrepreneurs entering into option-for-guarantee swaps (OGSs). OGSs significantly increase investment option value. Entrepreneurs initially accelerate their investments and then postpone them as funding gaps grow. Guarantee costs...