Value Creation Process And Mechanism Of The MBO

Wealth Creation theory, main stream management buyout (MBO) theory, does not fully disclose the process and mechanism of how MBO improve the value and efficiency of a corporate, and lack of general explaination and guidance to the MBO activities. This paper starts from the study of logical relationship between MBO and the corporate governance, proposes the corporate governance restructure theorm of MBO, performs in depth theoretical and practical analysis, and points out that corporate governance restructure and improvement led by the MBO is the major power that improve the corporate value and efficiency.Research finds out that the change of the shareholder structure in modern corporate lead by the MBO, and the subsequent restructuring of the share incentive and constrain mechanism have active impact on the improvement of corporate governace. Because MBO has active effects on property rights clearance, human-like property rights subject establishment, management share incentive and restriction strengthen, etc., it has active meaning on effectively resolve significant problems faced by state-owned listed companies in China.But practical research also find out that after the implementation of MBOs in the state-owned listed companies, the improvement of the financial ratio is not so significant. Further research find out that the phenomenent is caused by the systematic limitation of China's capital market, the restrain of MBO system and some of the recent MBO mode. They also cause the distortion of incentive and conduction in China's MBO. The key point is that it is hard to effective control the management "insider control" phenomenent after the MBO. By introducing the strategy investors to perform co-buyout with the management, the so-call mixed MBO mode, and reasonably define the effective edge of MBO, the management "insider control" phenomenent can be effectively restrained, and so the MBO can really become the effective method to improve the corporate governance, to increase the corporate value, and to improve efficiency.