Local Practice In The Management Buyout (mbo), And Improvement

As a financial transaction in the market, MBO (management buy-outs) swept over Europe and USA rapidly in 1980s'. And as an institutional imitation in the course of state-share enterprises'reform, a number of cases of MBO began to emerge in China after the first case of Beijing stone organization. Under the background of economic transformation, this paper studies the phenomenon of MBO in China.This paper breaks into four parts. Part one sums up the definition, evolvement history and theoretical basis of MBO. Generally speaking, MBO means that the top management of target companies purchases the stock or assets of their own companies through Leverage Buy-Outs in order to change the corporation ownership structure, controlling right structure and asset structure, with the ultimate goal to gain the expected earnings.Between the end of 1970s and the begin of the 1980s ,MBO is adopted by Russsia and East Europe countries as a way of transformational economy. The theorys that can explain MBO sufficiently include Agency Costs, Preventable Robbing and Entrepreneur's Spirit.Part two analyzes the feature of the MBO in China.MBO sprang up in 2002 in China because the government thought MBO as a way to improve the structure of the state-owned enterprises' property righrs. Also, the part two analyzes the stakeholders in the courses of MBO.Part three makes an empirical analysis about Chinese MBO. Firstly,the paper counts up and analyzes the listed corporates which have been bought out by the management. From the theoretical and empirical sides, this part studies how MBO afffects the dividend policy, repaying the loan and the listed coporates' operating. Secondly, this part draws a conclusion that MBO makes the managements change the dividend policy .Also, MBO makes the phenomenon of insider-control serious. The posssibility of connected transaction will become more secret and happen more than ever. In addition, part three analyzes the questions in Chinese MBO:the loss of national asset, the violating the principle of equity and efficiency, the question ofcoporate governance and the difficulty of financing.Part four brings forward the advice and main conclusion of the paper. Fundamentally, the impediment of MBO in China is determined by the characteristics of transformation economic. The perfection of MBO in China is depending on that the market becomes more mature and the law becomes better.The paper adopts the comparative analysis in methodology. It emphasizes the restriction of the State enterprises' reform background on MBO in China. And the paper applies the case study, which is an important method in economic research. The structure arrangement is as follows: Part three is the main part of this paper with part one offering the theoretical bases and part two supplying the frame of reference .Meanwhile, part four is necessary in logic and is a sublimation of the paper as a whole.