Financial Distress Risi! of LBOs - Euidence from Nordic Countries

Abstract

In this master thesis, we study the financial distress risk and bankruptcy rate of leveraged buyout companies in the Nordic market between 2000 and 2020. Furthermore, we examine industry effects on financial distress risk using the same panel data sample. Our findings suggest that buyout firms experience a higher financial distress risk compared to comparable firms not subject to a leveraged buyout transaction. However, our results do not let us conclude that buyout companies experience a higher probability of bankruptcy than comparable nonbuyout companies. Lastly, our analysis examining industry effects does not have statistical power to analyse a firm’s financial distress post an LBO transaction by the industry they operate in.