Creditor protections and cross-country LBOs
This paper examines the relation between legal conditions and leveraged buyouts (LBOs) in 49 countries. The data indicate that sophisticated PE fund managers carrying out large international LBOs can only partially mitigate costs associated with inefficient legal protections. LBOs are more active in countries with strong creditor rights. Club deals are more likely to occur in countries with weak creditor rights. Cross-border LBO investment is more common from strong creditor rights countries to weak creditor rights countries. Premiums offered to shareholders are on average negatively correlated with creditor rights for both domestic and cross-border LBOs.
The Journal of Banking and Finance
CAO, Xiaping; Wang, Xiaoming; QIAN, Meijun; and Cumming, Douglas.
Creditor protections and cross-country LBOs. (2005). The Journal of Banking and Finance. 50, 69-80. Research Collection Lee Kong Chian School Of Business.
Available at: http://ink.library.smu.edu.sg/lkcsb_research/4398