Open AccessShareholder Wealth Maximization Under Leveraged Buyouts
Author(s) -
William J. Bertin,
Khalil M. Torabzadeh
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v4i2.6432
Subject(s) - leveraged buyout , shareholder , business , maximization , excess return , monetary economics , accounting , finance , economics , private equity , microeconomics , corporate governance , paleontology , context (archaeology) , biology
This paper examines the possible excess returns to stockholders arising from leveraged buyout transactions in an effort to determine whether or not such transactions are consistent with shareholder wealth maximization. In addition, the excess returns generated through leveraged buyouts are compared to those associated with typical, non-leveraged acquisitions. The implications of these comparisons are discussed with a special emphasis on the impact of leveraged buyouts upon investors wealth. The major finding of this study is that shareholder wealth is increased, but not necessarily maximized, under leveraged buyouts.