Case-studies Of The Effects Of Management-Buyout On Corporation Management Mechanism

With China’s reforming and opening up for more than30years, earth-shaking changes have taken place in the field of economics. However, along with the further development, it is recognized that the problems including ambiguity of property rights, ownership absence, lacking of management incentives have become the bottleneck of further development. After the active and fruitful exploration by theory circle and practice circle in order to accelerate structural optimization as well as improve corporate governance mechanism, Management-buyout came into our perspective and developed quickly and vigorously in China, as a solution to the former problems.Management-buyout is a mature method to conduct ownership changes overseas, which is widely accepted as an important way of merger and acquisition in not only European countries including the US, France, Germany, Italy but also America, even Asian country such as Japan. The fundamental reason of this phenomenon is that more and more researches have shown that corporations with management-buyout did achieve wealth creation through improvement of corporation governance mechanism. And that is great inspiration and references for Chinese corporations in deepen reformation.However, there has been a fierce debate considering the effects of management-buyout. Some argue that it could stimulate the enthusiasm of management layer as well as avoiding the worry of introducing foreign capital, while the others think that rather than improving the management structure, management-buyout may result in the loss of state-owned capital. And after studies of more than60cases, we do admit that management-buyouts may not suitable for all enterprises in promoting corporation governance mechanism.These years, Chinese academics are conducting gradually in-depth study from the introduction of MBO to its effects and influential factors to it, etc. The emphases of these studies concentrate in two aspects:Firstly, a demonstration of the possibility and necessity of MBO in China, specifically in the causes of MBO, the capital resources, the enclosure of information; Secondly, studies of finished MBO to investigate whether the effect of wealth creation does exist. It is considered although the current researches have made great contribution to MBO in China, there are some drawbacks:(1) The definition of Management-buyout is not clear enough, which limits its application;(2) The superficial effect of MBO is the change in ownership structure, while the deep one is the change in corporation mechanism, but current researches paid too much attention on the former rather than the latter one;(3) Most of the case-studies were too general that did not give full play to the direction of the practice to theory.In the consideration of this paper, the effect of MBO on corporation governance mechanism should be the key point to get a knowledge of whether there’s wealth creation after MBO. In pursuing that, this paper gives the priority to the method of case-study, uses the causes of MBO and the capital resources of MBO as breakthrough points, selects four different cases to analyse their changes in corporation governance mechanism regarding owner-ship structure, incentive mechanism, and restriction mechanism.The structure of this article can be separated into four parts:The first part includes Chapter1, introducing the backgrounds, purpose, frame and basic information of this article; The second part includes Chapter2and Chapter3, introducing the general situation of MBO in China recent years after summarizing the relevant literature in this field; The third part includes Chapter4and Chapter5, contrastively analyzing two groups of four MBO cases from the perspective of MBO capital resources and causes; The forth part includes Chapter6, summarizing the cases and making policy advice.The expecting innovation of this paper lies in three aspects:From the aspect of theory, this article comes in through the corporation governance mechanism, which is quite a new perspective for the study of MBO; from the aspect of method, this article uses case-study as a priority, combining descriptive statistical method, especially the comparative analysis makes it more intuitive to understand; from the aspect of case selection, rather than using the earliest and most widely concerned cases, this article chooses ones that are more classic and representative in related MBO fields.