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Management Equity Ownership, Debt and Performance: Some Evidence from UK Management Buyouts

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  • Thompson, R S
  • Wright, Mike
  • Robbie, Ken

Abstract

This paper presents an empirical examination of the effectiveness of the incentive arrangements incorporated in management buyouts. It calculates and analyzes the excess returns to capital between buyout and public share offering for a sample of U.K. buyouts obtaining a market quotation between 1984 and 1989. After controlling for agency and signaling factors associated with the flotation and for firm-specific characteristics, management equity share emerges as the dominant influence on performance. This result is consistent with the view that the management buyout is principally a device to increase managerial motivation. Copyright 1992 by Scottish Economic Society.

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Bibliographic Info

Article provided by Scottish Economic Society in its journal Scottish Journal of Political Economy.

Volume (Year): 39 (1992)
Issue (Month): 4 (November)
Pages: 413-30

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Handle: RePEc:bla:scotjp:v:39:y:1992:i:4:p:413-30

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Cited by:
  1. Phillippe Desbrières & Alain Schatt, 2002. "The Impacts of LBOs on the Performance of Acquired Firms: The French Case," Journal of Business Finance & Accounting, Wiley Blackwell, Wiley Blackwell, vol. 29(5&6), pages 695-729.
  2. Steve Thompson, 1999. "Increasingly Marginal Utilities: Diversification and Free Cash Flow in Newly Privatized UK Utilities," Review of Industrial Organization, Springer, Springer, vol. 15(1), pages 25-42, August.
  3. 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, Ghent University, Faculty of Economics and Business Administration 12/800, Ghent University, Faculty of Economics and Business Administration.
  4. Fabio Bertoni & María Ferrer & José Martí, 2013. "The different roles played by venture capital and private equity investors on the investment activity of their portfolio firms," Small Business Economics, Springer, Springer, vol. 40(3), pages 607-633, April.
  5. Dale, B.G. & Richardson, R. & Wright, D.M., 2001. "Triple inaugural address for the Rotating Chair for Research in Organisation and Management," ERIM Inaugural Address Series Research in Management, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University an EIA-2001-001-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam..
  6. Kevin Amess & Mike Wright, 2012. "Leveraged buyouts, private equity and jobs," Small Business Economics, Springer, Springer, vol. 38(4), pages 419-430, May.
  7. Mike Wright & Nick Wilson & Ken Robbie, 1996. "The Longer-Term Effects of Management-Led Buy-Outs," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, Pepperdine University, Graziadio School of Business and Management, vol. 5(3), pages 213-34 , Fall.

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