We develop and test a model of debt structure and pricing in leveraged buyouts (LBOs). The model accounts for both market and firm specific variables and illustrates how collateral, security and seniority, as well as target future cash-flows and market interest rates determine the cost of...

We show that the structure and pricing of debt in LBOs mostly depend on a single characteristic of the target firm, pre-LBO profitability. We find a positive relationship between pre-LBO profitability and deal leverage that is consistent with a dynamic trade-off theory of capital structure in...

This paper examines debt structure using a new and comprehensive database on types of debt employed by public U.S. firms. We find that 85% of the sample firms borrow predominantly with one type of debt, and the degree of debt specialization varies widely across different subsamples — large...

This paper examines debt structure using a new and comprehensive database on types of debt employed by publicly listed U.S. firms. We find that specialization in a single debt type is a widespread phenomenon, and that the degree of specialization varies widely across different subsamples —...

This paper examines debt specialization by publicly listed U.S. firms and offers some explanations using a new and comprehensive database on debt structure. Our main findings are that specialization in a single debt type is a prevailing phenomenon among U.S. firms, and that the degree of...

Syndication gives originating banks the opportunity to diversify part of their credit risk by selling loans to other members of the syndicate. However, as originating banks are less exposed to risk, their incentives to monitor borrowers diminish. We explore this trade-off with a theoretical...