Assessing the impact of management buyouts on economic efficiency: Plant-level evidence from the United Kingdom

Richard Harris, Donald Siegel, Mike Wright

Research output: Contribution to journalArticle

128 Citations (Scopus)

Abstract

We assess the total factor productivity of 35,752 manufacturing establishments before and after management buyouts (MBOs). MBO plants are less productive than comparable plants before the transfer of ownership. They experience a substantial increase in productivity after a buyout, which appears to be due to measures undertaken by new owners to reduce the labor intensity of production, via outsourcing of intermediate goods and materials. These findings, which are pervasive across industries, imply that MBOs reduce agency costs and enhance economic efficiency. Our evidence is consistent with Jovanovic and Rousseau (2002), who suggest that ownership changes shift resources to more efficient uses and to better managers.

Original languageEnglish (US)
Pages (from-to)148-153
Number of pages6
JournalReview of Economics and Statistics
Volume87
Issue number1
DOIs
StatePublished - Feb 1 2005
Externally publishedYes

Fingerprint

economic efficiency
labor intensity
management
increase in productivity
evidence
outsourcing
manufacturing
productivity
manager
industry
costs
resources
Economic efficiency
Management buyouts
experience

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics

Cite this

Assessing the impact of management buyouts on economic efficiency : Plant-level evidence from the United Kingdom. / Harris, Richard; Siegel, Donald; Wright, Mike.

In: Review of Economics and Statistics, Vol. 87, No. 1, 01.02.2005, p. 148-153.

Research output: Contribution to journalArticle

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