Optimal Information and Security Design

Nicolas Inostroza; Anton Tsoy

doi:10.1093/rfs/hhag093

Optimal Information and Security Design

Clicks: 33

ID: 332963

2026

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Ranked #54 of 209 articles by views in review of financial studies

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Abstract

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Abstract An asset owner designs an asset-backed security and a signal about its value. After experiencing a liquidity shock and privately observing the signal, he sells the security to imperfectly competitive buyers. With flexible information design, the security’s informational sensitivity is a blessing, not a curse. Among double-monotone securities, the issuer prefers to sell the asset in combination with an appropriate signal rather than design more complex securities. Within the class of monotone securities, live-or-die securities are optimal and strictly dominate asset sales. When signals are restricted to be sufficiently informative about the upside, debt and additional-tier-1 debt become optimal. (JEL D82, D86, G32)

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Reference Key	openalex_W7222971095 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors	Nicolas Inostroza, Anton Tsoy Are you one of these authors? Claim your profile
Journal	review of financial studies
Year	2026
DOI	10.1093/rfs/hhag093 Searching for DOI...
URL	https://doi.org/10.1093/rfs/hhag093 https://doi.org/10.1093/rfs/hhag093
Keywords	Keywords not found

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