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Management buyouts in times of economic policy uncertainty

  • Using a sample of 18,225 global buyouts, we find that management buyouts (MBOs) are significantly more likely to occur if economic policy uncertainty (EPU) increases. This finding is consistent with the idea that EPU provides an opportunity for insiders to capitalize on private information and time the market. Further results suggest that market timing pays off on average. We find that MBOs achieve more favorable buyout prices and greater post-buyout operating improvements than institutional buyouts during times of high EPU. Our results hold when exploiting close national election races as a quasi-natural experiment for EPU.

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Metadaten
Document Type:Article
Language:English
Author:Benjamin HammerORCiD, Sven Mettner, Denis SchweizerORCiD, Norbert WünscheORCiD
Chairs and Professorships:Chair of Financial Management
DOI:https://doi.org/10.1016/j.frl.2022.103499
Parent Title (English):Finance research letters
ISSN:1544-6123
Volume:52
Issue:March 2023
Date of Publication (online):2022/11/20
Article Number:103499
Tag:Economic policy uncertainty (EPU); Entrepreneurial finance; Leveraged buyout; Management buyout; Private equity (PE)
Content Focus:Academic Audience
Peer Reviewed:Yes
Rankings:AJG Ranking / 2
VHB Ranking / B
SJR Ranking / Q1
Licence (German):License LogoCreative Commons - CC BY - Namensnennung 4.0 International