Revisiting A theory of debt maturity and innovation [J. Econ. Theory 218 (2024) 105828]
成果类型：
Article
署名作者：
Biswas, Sonny; Koufopoulos, Kostas; Nguyen, Thi Mai
署名单位：
University of Reading; University of Sussex; University of York - UK
刊物名称：
JOURNAL OF ECONOMIC THEORY
ISSN/ISSBN：
0022-0531
DOI：
10.1016/j.jet.2026.106167
发表日期：
2026
关键词：
摘要：
We reconsider the incomplete contracting framework of Mitkov (2024) in which an entrepreneur seeks funding for a project and can privately choose its type. Renegotiation is permitted at an intermediate date. We characterize the conditions under which pay-for-failure is necessary to incentivize the entrepreneur to undertake the value-maximizing innovative project. When pay-for-failure is necessary, we generalize Mitkov (2024)'s results by showing that callable long-term debt can replicate the state-contingent contract for a strictly positive measure of parameters, and hence, we provide a rationale for its use in this setting.