Publication Type

Journal Article

Publication Date

1-2015

Abstract

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.

Keywords

LBOs, Creditor rights, Private equity, Cross border, Club deal, Law and finance

Discipline

Finance and Financial Management

Research Areas

Finance

Publication

Journal of Banking and Finance

Volume

50

First Page

69

Last Page

80

ISSN

0378-4266

Identifier

10.1016/j.jbankfin.2014.08.027

Publisher

Elsevier

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1016/j.jbankfin.2014.08.027

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