| Summary: | 碩士 === 國立中興大學 === 財務金融學系所 === 107 === This study estimates the degree of shareholder wealth gains/losses prior to firms'' leveraged buyouts (LBOs). Since the company can use earnings management to influence the market price, this study evaluates this issue at fair value. The results show that both institutional buyout (IBO) and management buyout (MBO) firms understate their earnings, the latter being more severe than the former. This situation leads MBO firms to be undervalued more seriously than IBO firms, but the former provide lower premiums than the latter. Putting them together, IBO and MBO shareholders gain and lose, respectively. These results reveal that the management of MBO firms expropriates shareholder wealth by deflating earnings to pay low transaction values relative to fair values.
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