The Impact Of Management Buy-Outs On Corporate Governance In Listed Company

Since management buyout (MBO) has been implemented in China in 1997, it has gone through flourish,controversial,trucial and specified phases. Although it has disappeared in the view of people for several years, it never stoped. The suspended object is only large state-owned enterprises. According to statistics,70% to 80% small state-owned enterprises in China have successfully implemented management buyout, even the large state-owned enterprises also has not stopped their steps. The lift of the ban on MBO is only a problem of time. So far, many of the enterprises have implemented MBO for more than 5 years, so the study on impact of MBO on corporate governance is more convincing.This paper using a combining of standard and empirical method on this problem. First of all, it introduced, summarized and concluded the basic theory of MBO and corporate governance, to deepen the understanding of relevant theories during this process. Then theoretically analysis the impact of corporate governance caused by MBO, and supported the conculsion by empirical analysis. According to the study we found that, in theory, MBO has a impact on ownership structure of corporate governance, board effectiveness, financial performance and executive payment, but not all of these are positive impacts. Because there exsit a separation between cash flow rights and control rights, it could lead to a new " Internal Control", and could also offset the positive effects caused by the reduction of large shareholder's stake and equity spread.Although after empirical study we found out, MBO does have an effection on part of corporate governance, it does not mean it has an effection on the whole corporate governance. Therefore,at the last part of this paper, we used Factor Analysis to constructed a Integrated function to evaluate the performance of the entire corporate governance, and compared the performance between before MBO and after MBO. And we finally found out that under the present stage of ecomical and social environment, there is not a relativity between MBO and the performance of corporate governance. But it still has a significance to study on this issue, through the improving of econmic environment, we can enlarge its positivity and restrain its negativity.