Guarantees, Leverage, and Taxes

• 成果类型: Article
• 署名作者: Luciano, Elisa; Nicodano, Giovanna
• 署名单位: University of Turin; Collegio Carlo Alberto; University of Turin; Collegio Carlo Alberto; European Corporate Governance Institute
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu010
• 发表日期: 2014
• 页码: 2736
• 关键词: EQUITY CARVE-OUTS; business groups; FINANCIAL SYNERGIES; capital structure; RISK; OWNERSHIP; MARKETS; mergers; debt

摘要

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)