Private equity firms have become increasingly important sources of capital and governance for companies, and their financing choices have implications for the study of private equity and for corporate finance. In Borrow Cheap, Buy High? The Determinants of Leverage and Pricing in Buyouts (NBER Working Paper No. 15952), co-authors Ulf Axelson, Tim Jenkinson, Per Stromberg, and Michael Weisbach examine how private equity funds structure the financing of their leveraged buyouts (LBOs), and they compare this result to the capital structure of similarly-sized public corporations. The researchers also ask whether the financing of a buyout affects its pricing and investment return.
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