Creditor Rights and LBOs
Singapore Management University - Lee Kong Chian School of Business
Douglas J. Cumming
York University - Schulich School of Business
Australian National University (ANU) - College of Business and Economics
affiliation not provided to SSRN
February 15, 2010
5th Annual Conference on Empirical Legal Studies Paper
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.
Number of Pages in PDF File: 39
Keywords: LBOs, Creditor rights, Private Equity, Cross border, Club deal, Law and Finance
JEL Classification: G24, G32
Date posted: January 23, 2008 ; Last revised: October 17, 2014
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