Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts

Ulf Axelson, Tim Jenkinson, Per Stromberg and Michael Weisbach

Journal of Finance, 2013, vol. 68, issue 6, 2223-2267

Abstract: Private equity funds pay particular attention to capital structure when executing leveraged buyouts, creating an interesting setting for examining capital structure theories. Using a large, international sample of buyouts from 1980 to 2008, we find that buyout leverage is unrelated to the cross‐sectional factors, suggested by traditional capital structure theories, that drive public firm leverage. Instead, variation in economy‐wide credit conditions is the main determinant of leverage in buyouts. Higher deal leverage is associated with higher transaction prices and lower buyout fund returns, suggesting that acquirers overpay when access to credit is easier.

Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (114)

Downloads: (external link)
https://doi.org/10.1111/jofi.12082

Related works:
Working Paper: Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts (2012)
Working Paper: Borrow cheap, buy high? The determinants of leverage and pricing in buyouts (2012)
Working Paper: Borrow cheap, buy high? The determinants of leverage and pricing in buyouts (2012)
Working Paper: Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts (2012)
Working Paper: Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts (2010)
Working Paper: Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:68:y:2013:i:6:p:2223-2267

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().