LBOs, reversions and implicit contracts

Article Abstract:

The conventional view of going-private transactions is that they are designed to enhance the efficiency of the firm (for example, Jensen, 1986). A starkly different view is that these and other control transactions are motivated to effect transfers from other stakeholders in the firm to equity holders (Shleifer and Summers, 1988). This study exploits data describing pension terminations as a way to test these theories. We conclude that the efficiency theory can plausibly explain a substantial number of LBO-related terminations, by not enough to undermine the transfer theory. More specific predictions from the efficiency theory are needed to structure more exacting tests. (Reprinted by permission of the publisher.)

Analysis, Going private (Securities), Leveraged buyouts, Stock transfer

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Duty-Bound

Article Abstract:

Singapore has a problem with the subsidies code of the General Agreement on Tariffs and Trade (GATT). It would like to sign it to stop the United States from imposing duties on its exports. However, investors are attracted to Singapore because it has not signed.

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Why work?

Article Abstract:

A study conducted by the Cato Institute revealed that welfare benefits in all 50 states are higher than the minimum wage. In many cases, welfare payments even exceed the amount of money one can earn while working.

Research, Finance, Welfare, Public assistance, Cato Institute

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