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The Financing of Large Buyouts: An Empirical AnalysisUlf AxelsonLondon School of Economics; Swedish Institute for Financial Research (SIFR) Tim JenkinsonUniversity of Oxford - Said Business School; Centre for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI) Per StrömbergStockholm School of Economics; University of Chicago - Booth School of Business; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER); Stockholm School of Economics - Department of Finance Michael S. WeisbachOhio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER) AFA 2008 New Orleans Meetings Paper Abstract: This paper provides an empirical analysis of the financial structure of large recent buyouts. We collect detailed information of the financings of 153 large buyouts (averaging over $1 billion in enterprise value). We document the manner in which these important transactions are financed. Buyout leverage is cross-sectionally unrelated to the leverage of matched public firms, and is largely driven by other factors than what explains leverage in public firms. In particular, the economy-wide cost of borrowing seems to drive both leverage and pricing in buyouts. These results are consistent with a view in which the availability of financing impacts booms and busts in the private equity market.
Number of Pages in PDF File: 47 Keywords: Private equity, capital structure, buyouts JEL Classification: G32,G33,G34 working papers seriesDate posted: March 17, 2007Suggested CitationContact Information
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