Managerial efficiency: A study of management buyouts; Discussion

Aggregate measures of firm performance are less informative about the operating performance of a firm because they incorporate many other factors in addition to the direct outcomes of operating decisions. A more direct measure of operating performance that is based on the total factor productivity (...

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Bibliographic Details
Published in:Contemporary accounting research 1993-10, Vol.10 (1), p.179
Main Authors: Verma, Kiran, Falk, Haim
Format: Article
Language:English
Subjects:
Efficiency
Management buyouts
Management reviews
Margin
Productivity
Statistical analysis
Studies
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Summary:Aggregate measures of firm performance are less informative about the operating performance of a firm because they incorporate many other factors in addition to the direct outcomes of operating decisions. A more direct measure of operating performance that is based on the total factor productivity (TFP) of the firm is developed and tested. The measure is used to test for the presence of real gains in efficiency for management buyouts. The results for a sample of management buyout (MBO) firms in the manufacturing sector do not support the hypotheses of enhanced managerial efficiency. Relative productivity one year and 2 years after the MBO is below the level one year before the MBO. Furthermore, relative changes in productivity for the MBO sample of firms are less than the average for the industry. In a comment, Falk finds the study relevant and suggests some issues that should be considered in future research to build on the study.
ISSN:0823-9150
1911-3846