In choosing transparency, firms must trade off the benefits from better access to finance against the cost of a greater tax burden. This paper studies this trade-off in a model with distortionary taxes and endogenous rationing of external finance. The evidence from two different data sets, one formed only by listed firms and [...]
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Posted on April 25th, 2012
Posted on March 26th, 2012
In order to understand the role of private equity firms in the restructuring of financially distressed firms, we examine the private equity ownership of 2,156 firms which obtained leveraged loan financing between 1997 and 2010. The economic downturn beginning in 2007 is associated with a marked increase in defaults of these highly leveraged [...] Posted on March 25th, 2012
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, detailed, international sample of buyouts from 1980-2008, the authors of this paper find that buyout leverage is unrelated to the cross-sectional factors – suggested by traditional capital structure [...] Posted on February 8th, 2012
Governments in Europe and the US have recently acquired significant stakes in a number of financial institutions, raising fears that they will use their investments to pursue interventionist goals. The comparative analysis of 16 major bail-outs in Belgium, Germany, France, Ireland, Switzerland, the UK and the US provides evidence to the contrary. Fiscal [...] Posted on January 19th, 2012
A large amount of activity in the financial sector occurs in secondary financial markets, where securities are traded among investors without capital flowing to firms. The stock market is the archetypal example, which in most developed economies captures a lot of attention and resources. Is the stock market just a side show or [...] 8 pages
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