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Valuation Effects of LBO Announcements on Target Rivals: An Event Study of European Leveraged Buyouts between 2010 and 2016

Burtscher, Martin LU and Christie, Nick LU (2016) BUSN89 20161
Department of Business Administration
Abstract
The primary goal of this thesis is to determine whether leveraged buyouts perceptibly affect the stock prices of core competitors of the LBO target. Through the use of an original, meticulously constructed data set, the study aims to augment the scarce and discordant extant literature on the subject. A follow-up cross-sectional test is conducted to provide further insights into the dynamics that may influence the studied valuation effects. Overall, we report zero-mean, insignificant abnormal returns across all relevant event windows, indicating that, on average, rival firms display negligible net valuation effects as a result of leveraged buyouts occurring in their industries. While these findings may seem unspectacular, they do constitute... (More)
The primary goal of this thesis is to determine whether leveraged buyouts perceptibly affect the stock prices of core competitors of the LBO target. Through the use of an original, meticulously constructed data set, the study aims to augment the scarce and discordant extant literature on the subject. A follow-up cross-sectional test is conducted to provide further insights into the dynamics that may influence the studied valuation effects. Overall, we report zero-mean, insignificant abnormal returns across all relevant event windows, indicating that, on average, rival firms display negligible net valuation effects as a result of leveraged buyouts occurring in their industries. While these findings may seem unspectacular, they do constitute a novel verdict in the literature which simultaneously both challenges and supports previous empirical findings and neatly fits into the existing theoretical framework. (Less)
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author
Burtscher, Martin LU and Christie, Nick LU
supervisor
organization
course
BUSN89 20161
year
type
H1 - Master's Degree (One Year)
subject
keywords
private equity, leveraged buyout, LBO, competitors, rivals, announcement effects, event study, abnormal returns
language
English
id
8881252
date added to LUP
2016-08-22 12:40:16
date last changed
2016-08-22 12:40:16
@misc{8881252,
  abstract     = {The primary goal of this thesis is to determine whether leveraged buyouts perceptibly affect the stock prices of core competitors of the LBO target. Through the use of an original, meticulously constructed data set, the study aims to augment the scarce and discordant extant literature on the subject. A follow-up cross-sectional test is conducted to provide further insights into the dynamics that may influence the studied valuation effects. Overall, we report zero-mean, insignificant abnormal returns across all relevant event windows, indicating that, on average, rival firms display negligible net valuation effects as a result of leveraged buyouts occurring in their industries. While these findings may seem unspectacular, they do constitute a novel verdict in the literature which simultaneously both challenges and supports previous empirical findings and neatly fits into the existing theoretical framework.},
  author       = {Burtscher, Martin and Christie, Nick},
  keyword      = {private equity,leveraged buyout,LBO,competitors,rivals,announcement effects,event study,abnormal returns},
  language     = {eng},
  note         = {Student Paper},
  title        = {Valuation Effects of LBO Announcements on Target Rivals: An Event Study of European Leveraged Buyouts between 2010 and 2016},
  year         = {2016},
}