@techreport{NBERw3390,
 title = "How Risky is the Debt in Highly Leveraged Transactions? Evidence from Public Recapitalizations",
 author = "Steven N. Kaplan and Jeremy C. Stein",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "3390",
 year = "1991",
 month = "September",
 URL = "http://www.nber.org/papers/w3390",
 abstract = {This paper presents estimates of the systematic risk of the debt in public leveraged recapitalizations. We calculate the systematic risk of the debt as a function of the difference between the systematic equity risk before and after the recapitalization. The increase in equity risk is surprisingly small after a recapitalization, ranging from 28% to 52% depending on the estimation method. Under the assumption that total company risk is unchanged, the implied systematic risk of the post-recapitalization debt in twelve transactions averages 0.67. Under the alternative assumption that the entire market adjusted premium in the leveraged recapitalization represents a reduction in fixed costs, the implied systematic risk of this debt averages 0.42. },
}