.png){kind=icon}
.png){kind=icon}
Return
Guarantees, Leverage, and Taxes
.png){kind=icon}
OA
AI
DOI：10.1093/rfs/hhu010.png)
.png){kind=icon}
.png){kind=icon}
Share.png){kind=icon}
Save
Abstract
En 中文
This paper considers the optimal joint decision on firm organization and capital structure under a tax-bankruptcy trade-off, stressing the role of guarantees against default. Conditional guarantees, which are embedded in parent-subsidiary structures, increase joint value and joint debt relative to unguaranteed stand-alone firms. Such guarantees, that are unilateral rather than mutual for moderate default costs, may dominate the unconditional mutual guarantees built in mergers. We study the optimal characteristics of both guarantors and beneficiaries, as well as their impact on the self-enforcement potential of conditional guarantees. (JEL G32, G34, L22)
Keywords:
EQUITY CARVE-OUTS
BUSINESS GROUPS
FINANCIAL SYNERGIES
CAPITAL STRUCTURE
RISK
OWNERSHIP
MARKETS
MERGERS
DEBT
AI Summary
Key information extracted from the uploaded paper, including a brief overview, abstract, background, key highlights, visual analysis, and future outlook.