Feasibility Analysis Of China's State-owned Listed Companies Mbo

The management buy-out(MBO) is a special case of the leverage buy-out, which refer to the behavior that the management of corporate use the self-resource or the loaning capital to buy the shares, and change the property right structure, control right and capital structure of the corporate, and then recompose the corporate in order to the expected income. At the 90s of the latest century, in the stage of the state-owned firms reform, the MBO have entered into China as the scheme of solving the property rights problem and was popular in the following several years. The MBO in the state-owned firms has been applied by many local government and firms as the privatizing process. Thus the MBO, the foreign capital entering-in, private capital are main arrangements of "the individual advances, the state quits".The foundation of the Modern Enterprise System is the division between the ownership and management right through establishing the public corporate. The owners of corporate enforce the their rights based on holding the shares. And the ordinary operation or management is decided by the employed management. The MBO is the deviation and innovation while comparing the orthodox theory. It has the special character in the given economic environment. From the 60s of the latest century, in the western developed countries, the MBO have occurred as the case leverage buy-out in order to adapt the increasing and stinging market competition, improve the management efficiency and solve the increasing and grievous principal-agent problem.The MBO have been well developing in the both theoretic and empirical aspects. In the mainstream economic theory there are some explanations for it such as the theory of principal-agent, the theory of incentive mechanism andso on. In China some scholars consider that the MBO could solve the problem of the absence of the property rights ,eliminate the phenomena of solely strong state-owned shares, protect the interest of the average and small investors, cut down the cost of agent and realize the self-incentive and constraint of the management. But actually in China there are some deviations such between the current enforcement of the MBO and the justice principal of capital market and between the specific operations and lawful regulation. After the buy-out, the more severe economic risks are accumulated and the new interior control problem also occurs due to the lack of efficient supervision in the MBO process.In the second half part of this paper contains the analysis of the possibility of enforcing the MBO to the state-owned public corporates. Firstly, we indicate that the MBO reform of the state-owned enterprises has not realized the given targets. Secondly, we express that the lagging capital market can not change in short term and it can not provide the financing capital which need by the buy-out. Thirdly, we analyze that in the capital market there is the lack of the benchmark of assets pricing and has not come into being the desirable prices. Finally ,we consider that the MBO is only one of buy-out modes that was adopted by the part according-with-some-conditions firms confronting with some specific problems in the development of the modern enterprise management. Though the MBO has well developed in the developed countries and there are some abundant experiences. But because the market economic system of our country is faultiness, in which there have the lack of the matching law and perfect corporate governance structure and the relevant supervision mechanism and lucid information revealment, the management of the corporate will take advantage of the position of comparative shares-control to figure for their profit through damaging the average and small shareholdersor doing relevant deal. The MBO is deviated from the path of state-owned enterprises reform. The target of the MBO is realization of the unit between property rights and management rights which deviate from the Modern Enterprise System and do not accord with the direction of the development of Modern Enterprise System.So this way of buy-out can not be the leading mode of state-owned enterprise property rights reform. The two-rights-division management is the extreme target of the reform in China. It is also the best way toward the market economy which cast off the old economic institution.This paper studies the possibility of the MBO enforced in our country from the both theoretic and empirical aspects. The conclusion is that under the current economic condition, the state-owned public corporates have not the qualifications of enforcing the MBO in large scale and there is the lack of possibility.