Cross-Border LBOs, Human Capital, and Proximity: An Empirical Analysis using Open Sky Agreements

62 Pages Posted: 26 Apr 2014 Last revised: 17 Sep 2018

See all articles by Thomas J. Chemmanur

Thomas J. Chemmanur

Boston College - Carroll School of Management

Tyler Hull

University of Massachusetts Boston

Karthik Krishnan

Northeastern University

Date Written: September 5, 2008

Abstract

We show that cross-border private equity (PE) investments involving U.S. rather than non-U.S. PE investors are more likely have a successful exit (IPO or acquisition). Exogenous increases in effective proximity following “Open-Sky” agreements between the US and the target firm home country increases the propensity of U.S. PE firms to invest in these firms and increases their successful exit probability. We show that greater value-addition by US PE investors following proximity increases is at least partially due to better monitoring and that an important channel driving this is the more efficient allocation of experienced U.S. PE managers to cross-border deals.s.

Note: An earlier version of this paper was circulated under the title, “Cross-border LBOs, Human Capital, and Proximity: Evidence from a Natural Experiment”.

Keywords: International finance, LBO, private equity, open sky agreement

JEL Classification: G15, G34

Suggested Citation

Chemmanur, Thomas J. and Hull, Tyler and Krishnan, Karthik, Cross-Border LBOs, Human Capital, and Proximity: An Empirical Analysis using Open Sky Agreements (September 5, 2008). Available at SSRN: https://ssrn.com/abstract=2428834 or http://dx.doi.org/10.2139/ssrn.2428834

Thomas J. Chemmanur (Contact Author)

Boston College - Carroll School of Management ( email )

Finance Department, 436 Fulton Hall
Carroll School of Management, Boston College
Chestnut Hill, MA 02467-3808
United States
617-552-3980 (Phone)
617-552-0431 (Fax)

HOME PAGE: http://https://www2.bc.edu/thomas-chemmanur/

Tyler Hull

University of Massachusetts Boston ( email )

100 William T Morrissey Blvd
Boston, MA 02125
United States

Karthik Krishnan

Northeastern University ( email )

360 Huntington Avenue
414C Hayden Hall
Boston, MA 02115
United States
617-373-4707 (Phone)

HOME PAGE: http://www.northeastern.edu/kkrishnan

Register to save articles to
your library

Register

Paper statistics

Downloads
164
Abstract Views
1,742
rank
179,057
PlumX Metrics