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.
|Number of pages||5|
|Early online date||5 Dec 2012|
|Publication status||Published - 28 Feb 2013|
- equity-for-guarantee swap
- capital structure
- guarantee cost