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http://ssrn.com/abstract=1764406
 
 

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The Evolution of Capital Structure and Operating Performance after Leveraged Buyouts: Evidence from U.S. Corporate Tax Returns


Jonathan B. Cohn


University of Texas at Austin

Lillian F. Mills


University of Texas at Austin - McCombs School of Business

Erin Towery


University of Georgia

April 10, 2013

McCombs Research Paper Series No. ACC-02-11

Abstract:     
This study uses corporate tax return data to examine the evolution of firms' financial structure and performance after leveraged buyouts for a comprehensive sample of 317 LBOs taking place between 1995 and 2007. We find little evidence of operating improvements subsequent to an LBO, although consistent with prior studies, we do observe operating improvements in the set of LBO firms that have public financial statements. We also find that firms do not reduce leverage after LBOs, even if they generate excess cash flow. Our results suggest that effecting a sustained change in capital structure is a conscious objective of the LBO structure.

Number of Pages in PDF File: 67

Keywords: Leveraged Buyouts, Private Equity, Capital Structure, Corporate Governance

JEL Classification: G34, G32, H25

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Date posted: February 20, 2011 ; Last revised: May 1, 2013

Suggested Citation

Cohn, Jonathan B. and Mills, Lillian F. and Towery, Erin, The Evolution of Capital Structure and Operating Performance after Leveraged Buyouts: Evidence from U.S. Corporate Tax Returns (April 10, 2013). McCombs Research Paper Series No. ACC-02-11. Available at SSRN: http://ssrn.com/abstract=1764406 or http://dx.doi.org/10.2139/ssrn.1764406

Contact Information

Jonathan B. Cohn (Contact Author)
University of Texas at Austin ( email )
Red McCombs School of Business
Austin, TX 78712
United States
512-232-6827 (Phone)
Lillian F. Mills
University of Texas at Austin - McCombs School of Business ( email )
Austin, TX 78712
United States
Erin Towery
University of Georgia ( email )
Terry College of Business
Athens, GA 30602-6254
United States
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