An agency theoretic analysis of value creation through management buy-outs of family firms

James J. Chrisman, Jess H. Chua, Lloyd P. Steier, Mike Wright and McKee, D’Lisa N.

Journal of Family Business Strategy, 2012, vol. 3, issue 4, 197-206

Abstract: Family firms without able and willing family successors are frequently sold to non-family managers through management buy-outs (MBOs). Whether MBOs create value is thought to be dependent upon the ability to reduce owner–manager agency costs. In this article we examine the agency costs of MBOs that acquire family firms. We contribute to theory by arguing that in such situations, value creation by reducing agency costs will depend upon pre-MBO agency costs, the ability to solve the double agency problem, and the relationship between the cost of agency control mechanisms and the residual losses from opportunism before and after the MBO.

Keywords: Agency theory; Family business; Management buy-outs (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:fambus:v:3:y:2012:i:4:p:197-206

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DOI: 10.1016/j.jfbs.2012.10.003

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