Creditor protections and cross-country LBOs

Author

Xiaping CAO, Singapore Management UniversityFollow
Xiaoming Wang, SHUFE
Meijun QIAN, NUS
Douglas Cumming, York University

Publication Type

Journal Article

Publication Date

7-2005

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.

Discipline

Business

Publication

The Journal of Banking and Finance

Volume

50

First Page

69

Last Page

80

ISSN

0378-4266

Citation

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.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4398

Additional URL

https://ac.els-cdn.com/S0378426614003227/1-s2.0-S0378426614003227-main.pdf?_tid=15c661ca-9180-11e4-8c92-00000aab0f27&acdnat=1420094183_1f309586115508273f1454ed45af64b8