The Wage and Employment Effects of Leveraged Buyouts in the UK
AbstractUsing a unique hand-collected dataset, this study determines and quantifies the effects of LBOs (leveraged buyouts) on wages and employment in 1,350 LBOs. Based on an unbalanced panel 5,369 firms observed over the period 1999-2004, we find that all LBOs taken together have an insignificant effect on employment growth but have significantly lower wage growth than non-LBOs. Disaggregating LBOs we find: (1) wage growth is 0.31 of a percentage point lower for MBOs (management buyouts) and 0.97 of a percentage point lower for MBIs (management buy-ins); and (2) employment growth is 0.51 of a percentage point higher for MBOs and 0.81 of a percentage point lower for MBIs. The results indicate that MBOs and MBIs have a differing impact on firms' wage and employment behaviour and should not be treated as homogenous. The results are consistent with: (1) MBIs and MBOs involving the adjustment of wages to a more sustainable basis; (2) MBOs exploiting growth opportunities that lead to greater employment growth; and (3) MBIs not creating new employment opportunities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal International Journal of the Economics of Business.
Volume (Year): 14 (2007)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://taylorandfrancis.metapress.com/link.asp?target=journal&id=101205
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kevin Amess & Mike Wright, 2012. "Leveraged buyouts, private equity and jobs," Small Business Economics, Springer, vol. 38(4), pages 419-430, May.
- Dirk Engel & Joel Stiebale, 2009. "Private Equity, Investment and Financial Constraints – Firm-Level Evidence for France and the United Kingdom," Ruhr Economic Papers 0126, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
- L. Goossens & S. Manigart & M. Meuleman, 2007.
"The Change In Ownership After A Buyout: Impact On Performance,"
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium
07/484, Ghent University, Faculty of Economics and Business Administration.
- Goossens, L. & Manigart, S. & Meuleman, M., 2007. "The change of ownership after a buyout: Impact on performance," Vlerick Leuven Gent Management School Working Paper Series 2007-26, Vlerick Leuven Gent Management School.
- Marco Pagano & Giovanni Pica, 2011.
"Finance and Employment,"
CSEF Working Papers
283, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Hiroyuki Taguchi & Taichi Yanagawa & Masashi Harita, 2012. "Impact of M&A on the Employment in Japanese Companies," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 8(5), pages 581-608, November.
- Steven J. Davis & John C. Haltiwanger & Ron S. Jarmin & Josh Lerner & Javier Miranda, 2011.
"Private Equity and Employment,"
NBER Working Papers
17399, National Bureau of Economic Research, Inc.
- Steven N. Kaplan & Per Strömberg, 2008.
"Leveraged Buyouts and Private Equity,"
NBER Working Papers
14207, National Bureau of Economic Research, Inc.
- Wilson, Nick & Wright, Mike & Siegel, Donald S. & Scholes, Louise, 2012.
"Private equity portfolio company performance during the global recession,"
Journal of Corporate Finance,
Elsevier, vol. 18(1), pages 193-205.
- M. Wright & D. S. Siegel & L. Scholes, 2012. "Private Equity Portfolio Company Performance During The Global Recession," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/795, Ghent University, Faculty of Economics and Business Administration.
- Lehto, Eero & Böckerman, Petri, 2008. "Analysing the employment effects of mergers and acquisitions," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 112-124, October.
- Boucly, Quentin & Sraer, David & Thesmar, David, 2011. "Growth LBOs," Journal of Financial Economics, Elsevier, vol. 102(2), pages 432-453.
- Erich Battistin & Paolo Bortoluzzi & Fabio Buttignon & Martina Serafini & Marco Vedovato, 2013. "The Effects of Private Equity on Targets: Majority versus Minority Investments," "Marco Fanno" Working Papers 0167, Dipartimento di Scienze Economiche "Marco Fanno".
- Hiroyuki Taguchi & Taichi Yanagawa & Masashi Harita, 2010. "The Dynamic Impacts of M&A on Employment in Japan : Using Micro-data from the Financial Statements Statistics of Corporations by Industry," Microeconomics Working Papers 23114, East Asian Bureau of Economic Research.
- Tåg, Joacim, 2010. "The Real Effects of Private Equity Buyouts," Working Paper Series 851, Research Institute of Industrial Economics.
- Olsson, Martin & Tåg, Joacim, 2012. "Private Equity and Employees," Working Paper Series 906, Research Institute of Industrial Economics.
- Giancarlo Corsetti & Michael P. Devereux & John Hassler & Tim Jenkinson & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2009. "Chapter 3: Private Equity," EEAG Report on the European Economy, CESifo Group Munich, vol. 0, pages 123-140, 02.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty).
If references are entirely missing, you can add them using this form.