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Creditor Rights and LBOs

39 Pages Posted: 23 Jan 2008 Last revised: 17 Oct 2014

Jerry Cao

Independent

Douglas J. Cumming

York University - Schulich School of Business

Meijun Qian

Australian National University (ANU) - College of Business and Economics

Xiaoming Wang

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: February 15, 2010

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.

Keywords: LBOs, Creditor rights, Private Equity, Cross border, Club deal, Law and Finance

JEL Classification: G24, G32

Suggested Citation

Cao, Jerry and Cumming, Douglas J. and Qian, Meijun and Wang, Xiaoming, Creditor Rights and LBOs (February 15, 2010). ; 5th Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=1086775 or http://dx.doi.org/10.2139/ssrn.1086775

Jerry Cao (Contact Author)

Independent

No Address Available

Douglas J. Cumming

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

HOME PAGE: http://booksite.elsevier.com/9780124095373/

Meijun Qian

Australian National University (ANU) - College of Business and Economics ( email )

Canberra
Australia

Xiaoming Wang

affiliation not provided to SSRN ( email )

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