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Title: Can Tech and Debt Ever Marry? The Future of Leveraged Buyouts in the 21st Century
Authors: Stearns, Devin
Advisors: Bhatt, Swati
Department: Economics
Class Year: 2016
Abstract: This paper empirically examines the impact of debt on leveraged buyout performance. Research suggests that the use of debt financing to purchase a company can increase the value of the firm by improving corporate investment behavior and providing tax shields on interest payments. However, such a result depends on the underlying characteristics of the target company. Building from existing literature that suggests that leverage can lead high-growth firms to pass up value-creating projects, ultimately destroying firm value, I examine the impact of debt on returns to investors from leveraged buyouts of companies in the technology sector. I find that having greater leverage decreases the returns to buyouts of technology companies.
Extent: 79 pages
Type of Material: Princeton University Senior Theses
Language: en_US
Appears in Collections:Economics, 1927-2016

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