Despite the empirical prevalence of debt overhang, existing research has found little evidence of risk-shifting. To understand this discrepancy, we augment a traditional feedback model with an important feature: investors’ endogenous learning. We show that more ex-ante inefficient opportunities for risk-shifting encourage information acquisition. This lowers the ex-post likelihood a firm’s manager will choose such inefficient investments, attenuating risk-shifting. With debt overhang, this flips: more efficient projects discourage information acquisition. This increases the likelihood the manager forgoes efficient investment, amplifying debt overhang. Our analysis suggests a novel channel through which financial markets can differentially affect agency frictions between firm stakeholders.