Information asymmetries, financing and distorted investment

Due to information asymmetries good firms or bad firms all finance and invest under some conditions, who prefer equity to debt financing when the NPV of a project is enough low, and prefer debt to equity financing when the NPV of the project is enough high. Financing produces the firms' overinvestment or underinvestment, the probability of which is affected by factors. In special, if the firms only issue debt, then they can avoid overinvestment or underinvestment. Firm assets-in-place and the true NPV of the project being transparent may avoid overinvestment or underinvestment. Furthermore consider dynamic stock financing, it is discovered there are many equilibria in stock financing and distorted investment which are related with different information asymmetries.