Alexander Belyakov

Alexander Belyakov

Contact Information

  • office Address:

    3620 Locust Walk
    Finance Department, 2419
    Philadelphia, PA 19104

Research Interests: Private Equity

Links: CV


  • Alexander Belyakov, Leverage and Financing in Distress.

    Abstract: Very few firms issue equity to refinance their debt in distress. This simple observation has an important effect on the predictions of capital structure models. A model in which highly-levered firms needing external finance must issue debt explains the overall underleverage puzzle, fully replicates the ‘fat’ right tail of cross-sectional leverage distribution, and produces realistic default probabilities across firms with different leverage values. The model succeeds even if bankruptcy costs are only 10% of firm’s assets, whereas the model that allows for equity issuance requires bankruptcy costs to exceed 60% in order to generate plausible average leverage.

  • Alexander Belyakov, Omitted Variable in Capital Structure Regressions.

    Abstract: This paper addresses two puzzling empirical results in the capital structure literature: why leverage and profitability are negatively correlated, and why investments are explained by the cash flow in a regression controlled for the market-to-book ratio. The paper derives a model, in which firms are heterogeneous in the quality of their investment opportunities. Firms with ex-ante better investment opportunities 1) issue less debt that is not dedicated to finance invest- ments, and 2) are able to raise debt at a smaller rate conditioning on the leverage, which results in a smaller leverage over time in this group of firms. Firms with ex-ante better investment opportunities also invest more, have greater ex-post profitability and greater cash flows. The model presented in the paper is simple and tractable, yet it gives a very good quantitative fit to the data.

  • Alexander Belyakov, Economics of Leveraged Buyouts: Theory and Evidence from the UK Private Equity Industry.

    Abstract: Empirical analysis of a sample of companies with private equity (PE) ownership in the UK shows that PE firms act as deep-pocket investors for their portfolio companies, rescuing them if they fall in financial distress. In contrast, external financing is expensive for companies without PE-ownership in financial distress. The paper builds a model that shows how companies form rational expectations about the costs of financial distress, and how these expectations affect ex-ante policies. The model explains the empirically-observed differences in how companies with and without PE-ownership invest, pay dividends, and issue debt. In particular, the model quantitatively explains the difference in leverage of companies with and without PE-ownership. The model shows that greater tax-shield benefits and superior growth of PE-backed companies can explain 6.4% of the abnormal return of PE firms. The conclusion that follows from the paper, however, is that abnormal returns PE firms cannot be replicated by other investors.


Latest Research

Alexander Belyakov, Leverage and Financing in Distress.
All Research