  |
|
|
||||
|
||||
Financial Leverage and Bargaining Power With Suppliers: Evidence from Leveraged Buyouts
David T. Brown University of Florida - Department of Finance, Insurance and Real Estate C. Edward Fee Michigan State University - Department of Finance Shawn E. Thomas University of Pittsburgh - Finance Group September 18, 2007 AFA 2007 Chicago Meetings Paper Swedish Institute for Financial Research Conference on The Economics of the Private Equity Market Abstract: We investigate whether leveraged buyouts (LBOs) affect the bargaining power of firms with their suppliers. We find that suppliers to LBO firms experience significantly negative abnormal returns at the announcements of downstream LBOs. We also find that suppliers who have likely made substantial relationship-specific investments are more negatively affected than suppliers of commodity products or transitory suppliers. Interestingly, leveraged recapitalization announcements are not associated with negative returns to suppliers, suggesting that increased leverage without an accompanying change in organizational form does not, on average, lead to improved bargaining power.
Keywords: Buying Power, Leveraged Buyout, Suppliers JEL Classifications: G32, G34 Working Paper SeriesDate posted: October 06, 2005 ; Last revised: November 08, 2007Suggested CitationContact Information
|
|
||||||||||||||||||||||||||
© 2009 Social Science Electronic Publishing, Inc. All Rights Reserved. Terms of Use Privacy Policy
This page was served by apollo3 in 0.125 seconds.
Download
Facebook
Twitter
Digg
Del.icio.us
CiteULike
