Abstract

This study conducts a moral analysis of leverage buyouts (LBOs) and relies on the holistic framework of the Triple Font Theory. It shows that the claims made by standard agency theory have not been successful both for the purchased firms and for the investors. In addition, the reductionism of the theories justifying LBOs may have favored some of the excesses observed in practice and contributed toward lessening the moral responsibility of market participants. The study suggests some possible reforms and explains what improvements virtue ethics and Catholic Social Teaching can bring. It formulates a set of recommendations that can be implemented by the regulators or market participants.