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The Effect of Management Buyouts on Firm-level Technical Inefficiency: Evidence from a Panel of UK Machinery and Equipment Manufacturers

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  • Kevin Amess

    ()
    (University of Leicester, UK)

Abstract

The longer-term technical efficiency effects of management buyouts (MBOs) are evaluated using a stochastic production frontier approach on a panel of UK manufacturing firms. The results, based on the period 1986-1997, indicate that firms with the MBO governance structure: (1) have higher efficiency in the two years before the transaction but not prior to that; (2) have efficiency 7%, 7.5%, 4%, and 7% higher in each of the first four years post-buyout; (3) do not have superior efficiency beyond the fifth year post-buyout. This is consistent with MBOs creating managerial incentives that improve firm-level performance. Copyright Blackwell Publishing Ltd 2003.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Industrial Economics.

Volume (Year): 51 (2003)
Issue (Month): 1 (03)
Pages: 35-44

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Handle: RePEc:bla:jindec:v:51:y:2003:i:1:p:35-44

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Cited by:
  1. Y. Alperovych & K. Amess & M. Wright, 2012. "Private Equity Firm Experience and Buy-out Vendor Source: What is their Impact on Efficiency?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/800, Ghent University, Faculty of Economics and Business Administration.
  2. Pehr-Johan Norbäck & Lars Persson & Joacim Tag, 2013. "Buying to Sell: Private Equity Buyouts and Industrial Restructuring," CESifo Working Paper Series 4338, CESifo Group Munich.
  3. Hammond, Christopher J., 2009. "The effect of organisational change on UK public library efficiency," International Journal of Production Economics, Elsevier, vol. 121(1), pages 286-295, September.
  4. Tåg, Joacim, 2010. "The Real Effects of Private Equity Buyouts," Working Paper Series 851, Research Institute of Industrial Economics.
  5. Kevin Amess & Mike Wright, 2012. "Leveraged buyouts, private equity and jobs," Small Business Economics, Springer, vol. 38(4), pages 419-430, May.
  6. Cumming, Douglas & Siegel, Donald S. & Wright, Mike, 2007. "Private equity, leveraged buyouts and governance," Journal of Corporate Finance, Elsevier, vol. 13(4), pages 439-460, September.

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