Firms and financial institutions are best viewed as ongoing entities, whose project completion may require renewed injections of liquidity. This paper proposes a contract-theoretic framework integrating three dimensions of corporate financing and prudential regulation: (a) liquidity management,...

The authors analyze the principal-agent relationship when the principal has private information as a three-stage game: contract proposal, acceptance/refusal, and contract execution. They assume that the information does not directly affect the agent's payoff (private values). Equilibrium exists...