Corporate governance, the long-term orientation and the risk of financial distress - evidence from european private equity backed leveraged buyout transactions

• Marini, Vladimiro ^[2] ; Caratelli, Massimo ^[3] ; Barbaraci, Ilaria ^[1]
  1. [1] University of Bologna

     University of Bologna

     Bolonia, Italia

     
  2. [2] University of Rome "Tor Vergata", Deparment of Mangement and Law (DML), Via Columbia 2 - 00133 Rome (RM)
  3. [3] University of Rome III, Department of Business Studies, Via Silvio D'Amico 77 - 00145 Rome (RM)

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• Localización: Piccola impresa: = Small Business, ISSN 0394-7947, Nº. 3, 2018
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • We study whether Private Equity sponsors are long-term oriented with their Leveraged Buyout (LBO) European targets after the euro-crisis. Their reputational constraints could incentivize them to value capture rather than value creation. Since LBOs are highly levered and LBO sponsors intervene in the corporate governance (CG), their orientation is measured by looking at how CG mechanisms affect portfolio companies’ Risk of Financial Distress (RFD). We find that LBO sponsors make a better use of CG mechanisms to mitigate RFD than other forms of ownership; however, results do not allow to exclude value capture.