Vulture Funds, Cognitive Costs, and LBO Bankruptcies

Vulture Funds, Cognitive Costs, and LBO Bankruptcies

The financial distress of companies subject to leveraged buyouts (LBO) might help explain their bankruptcy. The current research establishes a link between the presence of vulture funds and an increased probability of bankruptcy following LBOs. With an exploratory study, the author reveals that the...

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Sonraí bibleagrafaíochta
Foilsithe in:URI:https://journals.openedition.org/fcs,
Príomhchruthaitheoir: Balume, Fidèle
Formáid: Article ou chapitre numérique
Teanga:Anglais
Foilsithe / Cruthaithe: Finance Contrôle Stratégie 2024
Ábhair:
LBO
Fonds Vautours
Détresse Financière
Faillite
Redressement
Leveraged Buyouts
Vulture Funds
Financial Distress
Bankruptcy
Corporate Restructuring
Rochtain ar líne:Accès Université d'Orléans et IFPM
Accès Université d'Orléans et IFPM
id openedition-oai:revues.org:fcs_12700
record_format openedition
spelling openedition-oai:revues.org:fcs_12700 https://doi.org/10.4000/12d7d urn:doi:10.4000/12d7d en https://journals.openedition.org/fcs/12700 2024-09-26T02:00:00Z info:eu-repo/semantics/openAccess article info:eu-repo/semantics/article urn:handle:20.500.13089/12d7d All rights reserved Vulture Funds, Cognitive Costs, and LBO Bankruptcies Finance Contrôle Stratégie Association FCS info:eu-repo/semantics/reference/issn/2261-5512 info:eu-repo/semantics/reference/issn/1287-1141 URI:https://journals.openedition.org/fcs Balume, Fidèle LBO Fonds Vautours Détresse Financière Faillite Redressement Leveraged Buyouts Vulture Funds Financial Distress Bankruptcy Corporate Restructuring The financial distress of companies subject to leveraged buyouts (LBO) might help explain their bankruptcy. The current research establishes a link between the presence of vulture funds and an increased probability of bankruptcy following LBOs. With an exploratory study, the author reveals that the characteristics of companies under LBO facilitate the actions of vulture funds, whose strategy is not limited to the use of discretionary control power but also extends to unconventional methods, such as media campaigns and other informal tactics. Such actions by vulture funds contribute to increase the chances of bankruptcy, through two main routes: different biases in valuation at each stage of action and residual cognitive costs. Notably though, the increase in cognitive costs created by divergences between managers and vulture funds is unrelated to managerial competence. Nous explorons la détresse financière des entreprises sous LBO en vue d’expliquer la faillite de ces entreprises. Nous démontrons qu’il existe un lien entre la présence des Fonds Vautours (VF) et l’accroissement de la probabilité de faillite des LBO. Notre étude exploratoire suggère que les caractéristiques des entreprises sous LBO facilitent l’action des VF. Leur stratégie ne se limite pas à l’utilisation du pouvoir de contrôle discrétionnaire, mais s’étend à des méthodes non conventionnelles comme des campagnes médiatiques et d’autres méthodes informelles. L’action des fonds vautours contribue à la faillite de l’entreprise à travers deux principaux facteurs : les différents biais de valorisation à chaque étape de leur action et les coûts cognitifs résiduels. L’accroissement des coûts cognitifs associés aux divergences entre dirigeants et fonds vautours n’est pas lié à un problème de compétence des dirigeants.
collection OpenEdition Journal
language Anglais
format Article ou chapitre numérique
building 0/Bibliothèque numérique/
1/Bibliothèque numérique/OpenEdition Journals/
topic LBO
Fonds Vautours
Détresse Financière
Faillite
Redressement
Leveraged Buyouts
Vulture Funds
Financial Distress
Bankruptcy
Corporate Restructuring
spellingShingle LBO
Fonds Vautours
Détresse Financière
Faillite
Redressement
Leveraged Buyouts
Vulture Funds
Financial Distress
Bankruptcy
Corporate Restructuring
Balume, Fidèle
Vulture Funds, Cognitive Costs, and LBO Bankruptcies
description The financial distress of companies subject to leveraged buyouts (LBO) might help explain their bankruptcy. The current research establishes a link between the presence of vulture funds and an increased probability of bankruptcy following LBOs. With an exploratory study, the author reveals that the characteristics of companies under LBO facilitate the actions of vulture funds, whose strategy is not limited to the use of discretionary control power but also extends to unconventional methods, such as media campaigns and other informal tactics. Such actions by vulture funds contribute to increase the chances of bankruptcy, through two main routes: different biases in valuation at each stage of action and residual cognitive costs. Notably though, the increase in cognitive costs created by divergences between managers and vulture funds is unrelated to managerial competence.
author Balume, Fidèle
author_facet Balume, Fidèle
author_sort Balume, Fidèle
title Vulture Funds, Cognitive Costs, and LBO Bankruptcies
title_short Vulture Funds, Cognitive Costs, and LBO Bankruptcies
title_full Vulture Funds, Cognitive Costs, and LBO Bankruptcies
title_fullStr Vulture Funds, Cognitive Costs, and LBO Bankruptcies
title_full_unstemmed Vulture Funds, Cognitive Costs, and LBO Bankruptcies
title_sort vulture funds, cognitive costs, and lbo bankruptcies
publisher Finance Contrôle Stratégie
publishDate 2024
container_title URI:https://journals.openedition.org/fcs
url https://ezproxy.univ-orleans.fr/login?url=https://doi.org/10.4000/12d7d
https://ezproxy.univ-orleans.fr/login?url=https://journals.openedition.org/fcs/12700
_version_ 1877292304011624448

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