Why Do Firms Issue Guaranteed Corporate Bonds?

Corporations often use affiliated firms as guarantors when issuing guaranteed bonds, thus combining external financing with internal credit enhancements. In this study, we empirically examine the potential determinants of corporate guaranteed debt issuance. We find evidence that issuers with fewer tangible assets, lower credit ratings, more pronounced debt overhang and/or greater managerial agency problems are more likely to issue guaranteed bonds. Moreover, we find that while firms generally issue guaranteed bonds with different motives, alternative incentives for guaranteed bond uses are largely captured by bond prices at issuance.

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Work Title Why Do Firms Issue Guaranteed Corporate Bonds?
Open Access
  1. Fang Chen
  2. Jing-Zhi Huang
  3. Zhenzhen Sun
  4. Tong Yu
License CC BY-NC-ND 4.0 (Attribution-NonCommercial-NoDerivatives)
Work Type Article
  1. Elsevier BV
Publication Date October 2020
Publisher Identifier (DOI)
  1. 10.1016/j.jbankfin.2018.08.002
  1. Journal of Banking & Finance
Deposited September 09, 2021




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Version 1

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  • Added Why+do+Firms+Issue+Guaranteed+Bonds-AcceptedVersion-Aug2018-1.pdf
  • Added Creator Fang Chen
  • Added Creator Jing-Zhi Huang
  • Added Creator Zhenzhen Sun
  • Added Creator Tong Yu
  • Published
  • Updated
  • Updated