We review recent evidence and future directions for empirical research on financial
contracting in the context of corporate finance. Specifically, we survey evidence pertaining to …

We derive the optimal dynamic contract in a continuous‐time principal‐agent setting, and
implement it with a capital structure (credit line, long‐term debt, and equity) over which the …

We develop an analytically tractable model integrating dynamic investment theory with
dynamic optimal incentive contracting, thereby endogenizing financing constraints. Incentive …

We develop an agency model of financial contracting. We derive long-term debt, a line of
credit, and equity as optimal securities, capturing the debt coupon and maturity; the interest …

We consider a dynamic Mirrlees economy in a life-cycle context and study the optimal
insurance arrangement. Individual productivity evolves as a Markov process and is private …

An entrepreneur with limited liability needs to finance an infinite horizon investment project.
An agency problem arises because she can divert operating cash flows before reporting …

One of the most important developments in the corporate loan market over the past decade
has been the growing participation of institutional investors. As lenders, institutional …

Rating agencies are often criticized for being biased in favor of borrowers, for being too slow
to downgrade following credit quality deterioration, and for being oligopolists. Based on a …

This article studies optimal mortgage design in a continuous-time setting with volatile and
privately observable income, costly foreclosure, and a stochastic market interest rate. We …

We explore whether sustainability-linked loans (ie, syndicated loans for which pricing is
linked to a sustainability performance indicator) can facilitate meaningful sustainability …