Optimal capital structure with an equity-for-guarantee swap

Zhaojun Yang, Hai Zhang

Research output: Contribution to journalArticlepeer-review

30 Citations (Scopus)


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.
Original languageEnglish
Pages (from-to)355-359
Number of pages5
JournalEconomic Letters
Issue number2
Early online date5 Dec 2012
Publication statusPublished - 28 Feb 2013
Externally publishedYes


  • equity-for-guarantee swap
  • capital structure
  • guarantee cost


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