What drives financial distress risk and default rates of leveraged buyout targets? : empirical evidence from european transactions

摘要

Recent studies show that private equity ownership leads to increasing risk of financialdistress of their target companies, yet not resulting in higher default rates. But can thisbe observed in all European countries? And how can potential differences be explained?Based on an extensive set of accounting data covering target companies acquired in theperiod between 1997 and 2014 in 16 European countries, we employ panel data regressionsto answer these questions. Our results show differences among European countries andsuggest that larger capital markets, in particular debt markets, and stronger creditorprotection regimes are associated with lower financial distress risk. However, defaultrates seam not to be affected by these drivers.