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

10 Pages Posted: 19 Sep 2003

See all articles by Kevin Amess

Kevin Amess

Nottingham University Business School

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.

Suggested Citation

Amess, Kevin, The Effect of Management Buyouts on Firm-Level Technical Inefficiency: Evidence from a Panel of UK Machinery and Equipment Manufacturers. Journal of Industrial Economics, Vol. 51, pp. 35-44, March 2003. Available at SSRN: https://ssrn.com/abstract=416674

Kevin Amess (Contact Author)

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

HOME PAGE: http://www.nottingham.ac.uk/business/lizka1.html

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