I derive the optimal capital structure of a firm when its manager is ambiguity-averse. My model predicts substantially lower leverage for such firms, in comparison to traditional trade-off models. I use the 1982 Voluntary Restraint Agreement (VRA) on steel import quotas between the U.S....

We investigate how loan terms respond to competition between lenders when borrowers have multidimensional private information. In our model, competitive lenders screen borrowers using contracts that consist of an interest rate and a collateral requirement. Compared to a monopolistic lender, a...

We consider the optimal contract between an entrepreneur and investors in a moral hazard model when both parties have limited liability, are risk-neutral toward cash flow risk, and are ambiguity-averse. In the static setting, the first-best security is either convertible debt or levered equity....