Please complete Question 10ab
10. (Economic Research)
Holloway, Lee and Shen (2014) study the determinants of cross-border leveraged buyouts.
a) The authors present a stylized model of the global competition among buyout firms.
i) What factors in the model determine the number of acquisitions by buyout firm in each country?
ii) Can you think of any other factors that likely play a role in the real world?
iii) Where do these other factors implicitly enter the equation for the number of completed buyout deals by each investor in each country?
b) The authors test the predictions of the model using a sample of worldwide buyout deals.
i) Which two countries dominate as home countries for buyout firms in the sample?
ii) How do the authors test the prediction that transaction costs associated with remote ownership impact the number of deals? How do they measure the theoretical cost mitigation ability?
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iii) Are results consistent with the predictions of the model? How can you tell?