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Debt swaps and corporate strategic adaptation: A behavioral response perspective

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  • Tang, Dapeng
  • Chen, Nan
  • Zheng, Hao
  • Gu, Zixuan
  • He, Youtian

Abstract

This study examines the impact of local government debt-to-bond swap program (debt swaps) on corporate strategic adaptation. Based on data from 2015 to 2022, this paper finds that debt swaps encourage enterprises to adopt more aggressive strategic approaches. Mechanism discussions provide evidence consistent with firms responding through increasing innovation, expanding markets, and intensifying organizational expansion. Further analyses indicate that this strategic adaptation alleviates underinvestment among firms with analytical strategies, but overly offensive strategies may increase default risk. These findings provide policy-relevant evidence for improving local government debt governance and understanding firms’ strategic responses to fiscal reforms.

Suggested Citation

  • Tang, Dapeng & Chen, Nan & Zheng, Hao & Gu, Zixuan & He, Youtian, 2026. "Debt swaps and corporate strategic adaptation: A behavioral response perspective," Finance Research Letters, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:finlet:v:104:y:2026:i:c:s1544612326007397
    DOI: 10.1016/j.frl.2026.110211
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