This paper explores the effects of public information (e.g., accounting earnings) in a competitive lending setting where the borrower can engage in risk shifting. If a privately informed "inside" creditor bids against outsider creditors, public information levels the playing field with...

In this paper, we study the seniority orders between a firm's external debts and its inside-debt compensation to its manager, and analyze how different seniority orders influence equilibrium inside debt and external debt, as well as efficiency. We find the equilibrium inside debt varies with...

While there have been vast discussion on the materialistic benefits of continuous improvement from the Toyota and Honda experiences, the academic literature pays little attention to information sharing. In this paper, we construct a dynamic adverse selection model in which the supplier privately...

In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights...

Conventional wisdom suggests that audit risk disclosure improves the overall efficiency because investors are more informed of a client's financial performance. This view, while intuitive, ignores a potential externality of audit risk disclosure on auditor competence. We consider a two-period...

In this study, we show that when a firm needs external financing, information quality has real effects via financing contracts on the firm's input to influence its operational outcome. Interestingly, we find that higher information quality decreases overall efficiency. Our analysis highlights...