Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94006
Authors: 
Strausz, Roland
Year of Publication: 
2005
Series/Report no.: 
SFB/TR 15 Discussion Paper 34
Abstract: 
This paper studies the structure of optimal finance contracts in an agency model of outside finance, when investors possess private information. We show that, depending on the intensity of the entrepreneur's moral hazard problem, optimal contracts induce full, partial, or no revelation of the investor's private information. A partial or nonrevelation of information is optimal, when it mitigates an undersupply of effort by the entrepreneur due to moral hazard.
Subjects: 
informed investors
optimal finance contracts
partial information revelation
JEL: 
G24
D82
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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