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An analysis of management buy‐out failure
Author(s) -
Wright Mike,
Wilson Nick,
Robbie Ken,
Ennew Christine
Publication year - 1996
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/(sici)1099-1468(199601)17:1<57::aid-mde734>3.0.co;2-a
Subject(s) - restructuring , leverage (statistics) , incentive , business , context (archaeology) , agency (philosophy) , order (exchange) , finance , actuarial science , risk analysis (engineering) , economics , microeconomics , computer science , paleontology , philosophy , epistemology , machine learning , biology
Management but‐outs are an important aspect of corporate restructuring. In order to understand their longer‐term impact there is a need to examine their effects in recessionary conditions. In this context, the paper analyses the factors which lead to management buy‐out failure using both financial and non‐financial information. The evidence is consistent with the view that some mechanisms introduced to deal with agency cost problems, particularly management incentives and undertaking restructuring activity in a timely fashion are associated with a lower probability of failure. Excessive leverage and delays in restructuring are associated with a higher probability of failure.