A Empirical Study Of MBO Financial Performance In Chinese Listed Companies

Since "the revolution of manager" happened in 19 centuries, how to reduce the Agent's cost of the modem enterprise system has always been the main study of the western scholars. In China, during the reform of the stated-owned enterprises, the Internal Personnel Control and the principal-agent problem have also been the focus issues in theory and industrial horizon. In theory, MBO could solve efficiently the conflicting goals between the principal and agent by the consolidating the property and contracting management right, so that the agent's cost had been reduced or eliminated. Moreover, since the 1980s, it has been testified in practice that MBO had important effect on inspiring the managers, reducing the agent's cost and enhancing the enterprise performance, etc.Introduced into China in the end of the 1990s, MBO was becoming gradually the hot topic in theory and industry. With the implement of MBO in China, many problems had been emerged, and its effect on improving enterprise performance was oppugned. Especially, after the national discussion on the property reform educed by the "Lang-Gu" Controversy in August of the year 2004, the obvious divergence of opinion was aroused whether MBO was feasible in theory horizon. In the current conditions, whether the MBO had the same inspiriting effect and the advanced enterprise performance as the foreign country or the risk of internal personnel control, the loss of state assets and damaging the circulating-stock shareholders' benefit? This issue was proved urgently by empirical method which was short of empirical study on MBO. Therefore, analyzing the MBO performance, the article studied the actual effect of MBO in China.By the way of event study and factor analysis, the empirical analysis was carried out by the financial date before and after MBO, the result of which suggested that the listed company performance was declined after MBO compared with before. Additionally, analyzing the reasons of the aforementioned result, the paper made suggestions on the implement of MBO in China.