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How do leveraged buyouts affect industry peers' performance: Evidence from Europe

Manuel C. Kathan

Review of Financial Economics2025https://doi.org/10.1002/rfe.70011article
AJG 1ABDC B
Weight
0.41

What the paper says

Abstract This paper analyzes the impact of leveraged buyouts (LBOs) on the profitability of target firms' industry peers in Europe. To address the endogeneity of LBO activity, I employ a control function approach, using the European Takeover Directive as an instrumental variable. The results indicate that peers improve their profitability following LBOs, driven by improved asset utilization and enhanced cost efficiency. Unlike the findings in the US‐based literature, my analysis reveals that positive future industry developments also contribute to the overall effect. These findings suggest that the impact of LBOs on industry peers varies to some extent in the European context.

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https://doi.org/https://doi.org/10.1002/rfe.70011

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@article{manuel2025,
  title        = {{How do leveraged buyouts affect industry peers' performance: Evidence from Europe}},
  author       = {Manuel C. Kathan},
  journal      = {Review of Financial Economics},
  year         = {2025},
  doi          = {https://doi.org/https://doi.org/10.1002/rfe.70011},
}

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How do leveraged buyouts affect industry peers' performance: Evidence from Europe

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Evidence weight

0.41

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.25 × 0.4 = 0.10
M · momentum0.55 × 0.15 = 0.08
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.