Management Buy-out, Overall Listing And Corporate Governance-Case Study Of Shuanghui Mode

Over the past ten years, the reform of state-owned enterprises has obtained greatachievements, but there are still some historical problems remained such as the absence ofowners, unclearness of property rights, unreasonable structure of property rights, benefitsconvey between listing company and parent company and etc., which blocks the healthydevelopment of our market economy. The third plenary session of18thCentral Committeeof the Communist has put forward further deepening economic restructuring and modernenterprise system establishment. The character of modern company is the separation ofownership and control, which will lead to principal-agent problem. The agency cost willreduce the performance of the company.As a kind of system innovation, MBO can clear property right. Given residual rightsof control and residual claim right of enterprises, the management layer can be fullymotivated, which is significant to effective integration of enterprise, agency cost reduc eand management efficiency improvement. However, due to the lack of Chinese legalsystem, MBO has produced a series of problems in the application process. The mostvisible one is the conflict between controlling shareholder and minority shareholders. Thecontrolling shareholder (management layer) may invade the interests of minorityshareholders by affiliated transactions. Through overall listing, main industry assets willbe injected into the listing company so as to reduce affiliated transactions and improvecorporate governance structure and corporate performance. Taking Shuanghui group as anexample, this paper introduces the progress of MBO and overall listing, studies the effectson Shuanghui mode to corporate governance through analyzing financial indicators andsummarizes the characters of suitable company. Finally, this paper put forward thecountermeasures and suggestions to the new problems Shuanghui mode may cause.