The Study Of Effect Of MBO On China's Listed Company's Governance

It is one of urgent problems for China's security market to improve corporate governance and performance without injuring circulating shareholders' interests.Recently, many listed companies in China have adopted MBO as a measure of improving governance structure. But not all shares are circulating in China now. It is worth discussing whether MBO will bring its advantages into play in such special environment.First section discusses the objective of corporate governance and the developments of MBO. Analysis on the objective of corporate governance establishes a theory foundation for further study. Maximizing shareholders interests is the objective of corporate governance, which is the standard for appraising MBO. Section 2 first analyzes the problems in listed companies' governance in China and then discusses the benefits of MBO in improving structure of decision-making power and the possibility of damaging interests of circulating shareholders. Section 3 makes an empirical analysis on the changes of MBO listed companies in China from such aspects as structure of decision-making power, operating performance and interests of circulating shareholders. Researches show that the property of the first shareholder has changed; the difference of shares between the first shareholder and the second shareholder is reducing; but operating performance has not been improved, dividends are high and abnormal income is negative. Section 4 detailed analyzes the problems of MBO of listed companies in China, such as pricing, financing, lack of persons with ability in agencies. At last we draw the conclusion that it is not appropriate for listed company to exert MBO now.