IDEAS home Printed from
   My bibliography  Save this article

Buy-Outs, Divestment, and Leverage: Restructuring Transactions and Corporate Governance


  • Thompson, Steve
  • Wright, Mike
  • Robbie, Ken


This paper examines the role of buy-outs, divestment and other restructuring transactions as devices which may counter acknowledged weaknesses in the market for corporate control relating to managerial entrenchment strategies, acquisitions motivated by managerial interests, inadequate information availability to outside bidders and free-riding by target shareholders. Such devices strengthen corporate governance through informed management achieving significant equity ownership, high leverage to force management to seek profitable projects or pay out free cash flow and/or divest assets. Evidence reviewed in the paper shows that, on balance, restructuring transactions have a positive impact on performance at least in the short term. However, there remains considerable debate as to whether buy-outs in particular are long term or merely transitory structures. There is increasing evidence to suggest that the longevity of buy-outs is bi-modal--some change quickly, many remain as buy-outs for long periods. Copyright 1992 by Oxford University Press.

Suggested Citation

  • Thompson, Steve & Wright, Mike & Robbie, Ken, 1992. "Buy-Outs, Divestment, and Leverage: Restructuring Transactions and Corporate Governance," Oxford Review of Economic Policy, Oxford University Press, vol. 8(3), pages 58-69, Autumn.
  • Handle: RePEc:oup:oxford:v:8:y:1992:i:3:p:58-69

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Gottschalg, Oliver & Berg, Achim, 2005. "Understanding value generation in buyouts," Les Cahiers de Recherche 824, HEC Paris.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:8:y:1992:i:3:p:58-69. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.