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

Kevin Amess ()

Journal of Industrial Economics, 2003, vol. 51, issue 1, pages 35-44

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.

Date: 2003
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Journal of Industrial Economics is edited by Pierre Regibeau, Yeon-Koo Che, Kenneth Corts, Thomas Hubbard, Patrick Legros and Frank Verboven

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