Agency Theory, Potential for Operational Engineering and Buyout Activity

Public Deposited
Analytics

Downloadable Content

Download PDF
Request Version for Screen Reader
Last Modified
  • March 19, 2019
Creator
  • Chaddad, Fernando Ribas
    • Affiliation: Kenan-Flagler Business School
Abstract
  • This corporate governance study investigates the relationships among agency theory, potential for operational engineering and firm underperformance. The empirical setting is a set of PE (private equity) buyouts in the US from 1998 to 2007, building on earlier research on LBOs (leveraged buyouts). I employ direct measures of agency costs to test Jensen's free cash flows proposition as well as a new proposition by Kaplan, according to whom potential for operational engineering is a predictor of buyout activity in addition to agency conditions. I control for competing risks with a Cox proportional hazards model. My evidence fails to lend strong support for either proposition as an antecedent of buyout activity (direct effects). Finally, I find that, in the context of high asset inefficiencies (high potential for operational engineering) and high board independence, the probability of buyout activity is decreased.
Date of publication
DOI
Resource type
Rights statement
  • In Copyright
Advisor
  • Bettis, Richard Allan
Language
Access right
  • Open access
Date uploaded
  • October 11, 2010

Relations

Parents:

This work has no parents.

Items

Thumbnail Title Date Uploaded Visibility Actions
file details Agency theory, potential for operational engineering and buyout activity 2019-04-11 Public Download