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The Impact of Lbos on Investment Policies and Operations of Acquired French Firms

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Author Info

  • Philippe Desbrières

    ()
    (Université de Bourgogne)

  • Alain Schatt

Abstract

This paper evaluates the extent that French LBO targets' investment policy and operations can account for their overperformance discrepancy. Our empirical study has been carried out on 132 French LBOs between 1989 and 1994. The results show that the abnormal plunge in economic return cannot be explained by overinvestments or by inefficient working capital management. Nevertheless, abnormal increases in wages, supplies and/or sales price reductions appear to be prominent.

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File URL: http://leg.u-bourgogne.fr/images/stories/wp/1021002.pdf
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Bibliographic Info

Paper provided by Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations in its series Working Papers CREGO with number 1021002.

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Length: 30 pages
Date of creation: Oct 2002
Date of revision:
Publication status: published in Finance Contrôle Stratégie, vol.5, n°4, décembre 2002.
Handle: RePEc:dij:wpfarg:1021002

Note: version française publiée dans Finance Contrôle Stratégie, vol.5, n°4, décembre 2002.
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Postal: 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France

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Postal: Angèle Renaud, CREGO, 2 Bd Gabriel, BP 26611, 21066 Dijon Cedex, France
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Related research

Keywords: Leveraged buy-out; performance; investment policy; operations;

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References

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  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, vol. 29(5&6), pages 695-729.
  2. Gérard Charreaux & Philippe Desbrières, 2001. "Corporate Governance: Stakeholder Value Versus Shareholder Value," Working Papers CREGO 1010301, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.
  3. Fama, Eugene F & Jensen, Michael C, 1983. "Separation of Ownership and Control," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 301-25, June.
  4. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-29, May.
  5. Michael C. Jensen & William H. Heckling, 1995. "Specific And General Knowledge, And Organizational Structure," Journal of Applied Corporate Finance, Morgan Stanley, vol. 8(2), pages 4-18.
  6. Kaplan, Steven, 1989. "The effects of management buyouts on operating performance and value," Journal of Financial Economics, Elsevier, vol. 24(2), pages 217-254.
  7. Hite, Gailen L & Vetsuypens, Michael R, 1989. " Management Buyouts of Divisions and Shareholder Wealth," Journal of Finance, American Finance Association, vol. 44(4), pages 953-70, September.
  8. Brent W. Ambrose & Drew B. Winters, 1992. "Does an Industry Effect Exist for Leveraged Buyouts?," Financial Management, Financial Management Association, vol. 21(1), Spring.
  9. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
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