Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/329820 
Year of Publication: 
2025
Citation: 
[Journal:] Review of Financial Economics [ISSN:] 1873-5924 [Volume:] 43 [Issue:] 4 [Publisher:] Wiley [Place:] Hoboken, NJ [Year:] 2025 [Pages:] 519-547
Publisher: 
Wiley, Hoboken, NJ
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.
Subjects: 
control function approach
leveraged buyouts
peer firms
spillover effects
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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