Dodging Bullets: Changing U.S. Corporate Capital Structure in the 1980s and 1990s by Robert N. McCauley, Frank Iacono, Judith S. Ruud
An entertaining summary of the broad reshaping of U.S. corporate finance in the last decade and a half.
The late 1980s saw a huge wave of corporate leveraging. The U.S. financial landscape was dominated by a series of high-stakes leveraged buyouts as firms replaced their equity with new fixed debt obligations. Cash-financed acquisitions and defensive share repurchases also decapitalized corporations. This trend culminated in the sensational debt-financed bidding for RJR-Nabisco, the largest leveraged buyout of all time, before dramatically reversing itself in the early 1990s with a rapid return to equity.This entertaining summary of the broad reshaping of U.S. corporate finance in the last decade and a half looks at three major issues: why corporations leveraged up in the first place, why and how the leverage wave came to an end, and what policy lessons are to be drawn.Using the Minsky-Kindleberger model as a framework, the authors interpret the rise and fall of leveraging as a financial market mania. In the course of chronicling the return to equity in the 1990s, they address a number of important corporate finance questions: How important was the return to equity in relieving corporations' debt burdens? How did the return to equity affect the ability of young high-tech firms to finance themselves without selling out to foreign firms?
About the Authors Preface Acknowledgments 1 Introduction I The End of the 1980s 2 Why the 1980s Stopped: Leveraging as a Mania 3 Why the 1980s Stopped: Did Judges, Lawmakers, and Regulators Kill the Leveraging Business? 4 RJRNabisco: A Case Study II The 1990s 5 The Legacy of Debt and Corporate Refinancing in the 1990s 6 Relieving the Burden of Interest on Cash Flow 7 The Equity InfusionReverse LBOs 8 Cheap Equity Capital for Young Firms 9 Mergers and Acquisitions in the 1990s III Lessons 10 Policy and Asset Inflation 11 Conclusion Notes IndeX
What People are Saying About This
J. Fred Weston
This is a brilliant book.
From the Publisher
"This is a brilliant book." J. Fred Weston , Professor Emeritus, The John E. Anderson Graduate School of Management at UCLA"An excellent case history detailing the leverage excesses of the late1980s and subsequent return to equity in the 1990s. Dodging Bulletsappeals to both the academic searching for an alternative views of theperiod and the practitioner interested in lessons on managing financialcrises." Stephen C. Vogt , Department of Finance, DePaul University and MesirowFinancial,Inc.
Stephen C. Vogt
An excellent case history detailing the leverage excesses of the late 1980s and subsequent return to equity in the 1990s. Dodging Bullets appeals to both the academic searching for an alternative views of the period and the practitioner interested in lessons on managing financial crises.