EconPapers    
Economics at your fingertips  
 

Le rôle de la dette dans le LBO: une revue de la littérature

Ouidad Yousfi ()

No 2007-8, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: After 1985, a large number of LBO project were not able to meet their debt. Among these cases, the Federated Department Stores LBO repurchased by Campeau and the Gateway LBO repurchased by Macy's. But, the conventional view of LBO transactions is that they are designed to improve the efficiency of the firm. The question raised in this paper is the following : What makes the buyout debt so advantageous ? To answer to the question, we provide a survey of the theoretical and empirical literature based on two opposite sides : On the first side, debt is value enhancing (the agency theory, the tax savings theory, the asymmetric information theory, and the free cash flows theory). On the other side, debt creates private value captured by shareholders : The shareholders' gains come from the exploitation of financial market misevaluation, from the usage of tax benefits, and from rent expropriation from worker, suppliers and other corporate stakeholders (the transfer theory).

Keywords: Leverage buy out; asymmetric information; debt; capital structure; free cash-flows (search for similar items in EconPapers)
JEL-codes: G14 G32 G34 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007
References: View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://economix.fr/pdf/dt/2007/WP_EcoX_2007-8.pdf (application/pdf)

Related works:
Working Paper: Le rôle de la dette dans le LBO: une revue de la littérature (2007) Downloads
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:drm:wpaper:2007-8

Access Statistics for this paper

More papers in EconomiX Working Papers from University of Paris Nanterre, EconomiX Contact information at EDIRC.
Bibliographic data for series maintained by Valerie Mignon ().

 
Page updated 2020-09-15
Handle: RePEc:drm:wpaper:2007-8