Optimal capital structure with an equity-for-guarantee swap

Zhaojun Yang and Hai Zhang

Economics Letters, 2013, vol. 118, issue 2, 355-359

Abstract: This paper finds that a newly created equity-for-guarantee swap can significantly increase a firm’s value. If the firm earns more/less in a recession/boom market, the guarantee cost will decrease. The greater the business risk is, the more the guarantee cost will decrease and the higher the leverage ratio will be.

Keywords: Equity-for-guarantee swap; Capital structure; Guarantee cost (search for similar items in EconPapers)
JEL-codes: G21 G32 G33 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:2:p:355-359

DOI: 10.1016/j.econlet.2012.11.023

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