| Popis: |
The purpose of this study is to derive and empirically test a model that may explain anticipated gains from management buyouts (MBO's). In a partial equilibrium, asymmetric information milieu, the model shows that the maximum level of premium incumbent management will pay for outsiders' shares is a function of management's assessment of the economic gains from the buyout, its desire to divest, and the anticipated tax subsidy. The empirical validity of this model is tested with a sample of 71 MBO's which took place in the United States between 1979 and 1985. It is concluded that one of the major driving forces behind the MBO is the tax subsidy, but that management also expects real economic gains from the buyout. These conclusions are in agreement with the existing empirical literature on management buyouts. |
