CORPORATE-OWNERSHIP STRUCTURE AND PERFORMANCE - THE CASE OF MANAGEMENT BUYOUTS

I investigate changes in operating performance after 58 management buyouts of public companies completed during 1977-1986. Operating returns increase significantly from the year before to the year after buyouts as measured by operating cash flows (before interest and taxes) per employee and per dollar of operating assets. Subsequent changes in operating returns suggest that this increase is sustained. Adjustments in the management of working capital contribute to the increase in operating returns. The increase is not, however, the result of layoffs or reductions in expenditures for advertising, maintenance and repairs, research and development, or property, plant, and equipment. © 1990.