The Incentives Of The Investment And Financing

In many economic situations, the individual's private information is endogenous. In this thesis, the endogenous information is characterized by information gathering. The different ability individuals acquire different information with the same cost and the different ability individuals acquire the same information with the different cost are the classic states of the information gathering. I study the former state by dealing with the incentive problems between the information gathering and the investment. And study the latter state by dealing with the incentive problems between the information gathering and financing.First, we consider the heterogeneity of agent in the incentive problems between the information gathering and the investment under the view of the complete contract theory . Under the agent knowing his ability ex ante and the agent not knowing his ability ex ante, we study how the principle designs contracts in order to ensure the principle make the decision of implementation the investment when the principle acquires good news and the high ability agent implement the investment. And I compare these situations.Our analysis implies that the principle should pay rent to all agents. If the agent doesn't know his ability ex ante, it is necessary for the principle to integration of the information gathering and implementation the investment. If the agent knows his ability ex ante, it is possible for the principle to separate of the information gathering and implementation the investment.Second, beginning with the view of the incomplete contract theory, we analyze the incentive problems between the information gathering and the investment. Under the homogeneity and heterogeneity of the agent, we discuss how the principle incentives the agent gather information with effort and the agent tell the truth.It is shown that it is impossible for the principle to reach his goal by stage delegation. If the agent is homogeneity, the principle could reach his goal by the nonrestrictive full delegation and pay the agent as the decision of principle does not implement the investment. If agent is heterogeneity, the principle could reach his goalby the no restrictive delegation and pay agent as the decision of principle does not implement the investment under some cases. But under the other cases, it is possible for the principle to reach his goal by the restrictive full delegation and pay agent as the decision of principle does not implement the investment.Moreover, our study find the debt financing have double incentive effects, which have incentive effects on not principle but agent. So the agent would select the debt financing in order to reveal his ability.Finally, the thesis discusses the incentive problems between the information gathering and the financing.When the principle entrusts the financing to the agent, it is shown that the principle should offer contracts linear in the price of the financing . The contracts with line structure provide incentives for agent to tell the truth and follow the recommended effort. And the principle could take advantage over the commitment effect through maximum financing price to reduce the financing cost. The commitment through maximum price and delegate's effort are substitute for agent.