Research On The Incentive Effect Of MBO With Different Motivations Under Full Circulation

Implementation of MBO in China's history can be described as twists and turns,regarding its regulation over the left,tighten,relax in three stages.With the reform of the shareholder structure proceed smoothly in 2005,a full circulation of capital market has evolved.The MBO incentive mechanism distorted by dual ownership structure has been fixed,thanks to the behalf alignment between the holders of tradable shares and non-tradable shares,and the non-stock market-oriented pricing mechanism.The appearance of Management-led MBO which the ownership transfer of State-owned not involved also expanded and enriched our past Government-led MBO.Benign transformation of the capital market,suggests the need to pay attention to the incentive effect of MBO under different motives under the background of full circulation.This passage analyzes several cases in contrast,which involve both horizontal analysis and vertical analysis.The former to analyze the similarities and differences of the incentive effect of MBO under different motives,and the latter to analyze whether MBO in a full circulation of capital market has its own incentive effect.On the basis of the statistics of MBO in A share market since 2011,this passage take Zhejiang Furun and Shuanglu Herbs as samples which on behalf of Government-led MBO and Management-led MBO separately,and then research the incentive effect from the effect of marketing,the effect of stockholder's wealth and the effect of tunneling.Finally,we found that both Zhejiang Furun and Shuanglu Herbs didn't have the behavior of excessive investment like plunging deep into debt,conversely,they maintained a stable business model by de-leveraging.However,the business condition of Zhejiang Furun becoming worse after MBO while Shuanglu Herbs shows a better condition.The performance of Shuanglu Herbs provides a new routine for MBO,that is establishing a balancing ownership structure after MBO,to realize sufficient motivation and obligation to managers,and to less the chances to sell state assets.Even though the share rights entire circulation fixes the distorted incentive mechanism of MBO to some degree,the capital market matches it still limited the value transfer of MBO.The key to breaking the limitation is to build a capital market environment which matches it.