Leveraged buyouts, what are the implications for managerial motivation and efficiency?

The leveraged buyout (LBO) leads to a corporation being financed predominantly by debt, with the small equity base often owned directly by the corporation's management. The author finds some evidence that removing managerial and owner (shareholder) separation results in improved corporate performance. While welcoming this he notes that some wealth transfers from bondholders to shareholders may have occurred but, nevertheless, believes that further, perhaps more conservatively financed, LBOs will have a valuable future role. (bibliography, 1 figure, 1 table).