Gary Gorton
Institution
Yale University
PhD Year
1983
Phone
203-436-2857
gary.gorton@yale.edu
FTG Membership
Fellow
Website
https://som.yale.edu/faculty-research/faculty-directory/gary-b-gorton
Featured Work
Jul 14, 2025
Information-Concealing Credit Architecture
When the value of a pledgeable asset (or project) is uncertain, investors are tempted to examine it. The information cost is ultimately borne by the asset owner, reducing her financing capacity. A pecking order emerges. Debt generates a greater financing capacity than equity: unlike equity investors who own the asset directly, creditors own the asset only if the borrower defaults and, therefore, have weaker incentives...
