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Content archived on 2024-06-12

The effect of leveraged recapitalizations on rival firms

Objective



Leveraged recapitalizations involve large increases in indebtedness. While most lead to substantially improved performance, not all succeed. The research investigates how competitors are affected by
recapitalizations. Using a sample of recapitalizations and information on industry rivals, the research analyses the stock price reactions of industry rivals when one firm announces a recapitalization. We try to identify, a priori, which industries (and which firms) should have positive as opposed to negative share price reactions. We also investigate how rival firms' financial characteristics change after recapitalizations. This study should provide insights into the effects of debt on the competitiveness of firms and industries; and how the competitive position of European firms has been affected by the recent substantial increase in industry consolidation (in response to '1992').
Other research will examine how CEO decision-making changes with the length of time the CEO has been in post.

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Programme(s)

Topic(s)

Call for proposal

Data not available

Funding Scheme

RGI - Research grants (individual fellowships)

Coordinator

London Business School
EU contribution
No data
Address
Sussex Place Regent's Park
NW1 4SA London
United Kingdom
Total cost
No data

Participants (1)