The Research On Circuitous Management Buy-outs

Management buy-out (MBO) has been an important method in the reform of state-run enterprises in China since it was introduced from western countries. However, due to the special state of China and its imperfectness in relative systems, management buy-out has been often rejected and failed to be advanced in the implementation. Consequently, this method has been questioned in field of theory and practice. What is worse, it is prohibited by State Asset Administration Committee. Despite of the limitation of the policy, management buy-out has never been stopped, however, in a way of more concealed and indirect.Basing on the case of Shineway Group, by analyzing the whole process of its indirect MBO, this thesis will focus on the theme as follow:under the atmosphere of the new policy, what is the characteristic of the state-owned enterprises? What is the effect on the listed companies by the indirect MBO and what is the recommendations for the related issues.Content and opinion:Chapter one is introduction, mainly focusing on the background and significance of the research, also showing the basic method, context structure and primary breakthrough point of the thesis.Chapter two is literature review, emphasis on describing the5dominating theory on MBO issues:Agent Cost Theory and Modern Contract Theory by Jensen, Entrepreneur Spirit Theory by White, Encourage System Theory by Jensen and Murphy, Sharing Economy and Defense-deprive Theory by Martin and Weston. After that, chapter two generally discussed the issue about MBO on state-run entity.Chapter three mainly shows the development of MBO in China, following the development of MBO in the world, including the analysis on the reason, the way, the implementation and the effect. Then, associating with the state-run enterprise, chapter three specifies the growth of MBO in China. Chapter four is the key part of this thesis, dealing with the analysis of the case. In the beginning of the chapter, the author spend a significant effort to describe the growing up of the indirect MBO in China after the direct MBO is prohibited. Also, the author shortly introduced the process of MBO in two classical cases—case of "YantaiXinchaoIndustryCo.,Ltd" and case of "Changsha Zoomlion Heavy Industry Science And Technology Development Co.Ltd". After that, the author steps into the theme of the thesis:understanding the indirect MBO process of Shineway Group and recognizing its controlling structure by study its released financial data and relative significant information. Consequently, the data analysis on development of Shineway group during the period after the indirect MBO is followed. The analyzing means are as follows:Mean one:by event study, using the stock price of Shineway Development, setting the window phase as [-30,+30], calculating the car-value of Shineway Development after the indirect MBO is accomplished. The result shows indirect MBO cause a positive movement on the stock price and to some extent, it benefits the development of the whole enterprise.Mean two:through the data analysis about the individual items on the financial statement by Shine Development within year2010and the first half of year2011, the author conclude the Shineway Development’s indirect MBO lead a positive effect on its stock price.Beside the behavior mentioned above, tightly combining the indirect MBO by Shineway Group, the author points out the majority problems:imperfect of the information disclosure on interest movement, unclear on financing resource and the price setting in transfer.