Corporate Governance In The Management Buyout Reconstruction

Management Buy-outs (MBO) is a kind of corporate ownership restructuring instrument in which the targeted corporation's top management buyout the corporation's shares with the help of leveraged financing or stock exchange to reform the coprporation's ownership structure, control structure and asset structure. After the buyouts, top management can reorganize the targeted corporation and gains expected return. The aim of top management in MBO is to restructure the targeted corporation's ownership and control structure and then turn themselves from managements to controlling stockholders.As a form of Chinese state-owned enterprises' reform, MBO has brought a great debate both in the theoretic research and in practices. What kind of roles can MBO play in the process of the reform of Chinese state-owned enterprises? This question is the focus of both sides of the debate. Can it be the efficient form of ownership reform of state-owned enterprises? Or is it only a kind of instruments by which the insiders of the firms seek rents in the camouflage of ownership reform?This dissertation focuses on the managerianl incentives in the process of buyouts, the efficiency of management buyouts, and the reasons that caused the main problems in practices. The dissertation insists that MBO is only a kind of instruments used to restructure corporation ownership and that we should treat it rationally. The dissertation argues that the main reasons that caused these problems in MBO practices are the imperfectness of corporate governance mechanisms and the enforcement of related laws. So we should first build or perfect the corporate governance mechanisms such as Corporation Act, Security Act, State-Owned Assets Act, etc. And second we should strengthen the enforcement of related acts.There are 7 chapters in this dissertation.Chapter 1 surveys related literatures and put forward this dissertation's theoretic foundations. This chapter analyses the principal-agent problem from the perspectives of Neo-Classical Economics, Transation Costs Economics, the Economic Theory of Anency and Common Agency. The dissertation compares five main mechanisms of corporate governance: large stockholders, delegated monitoring, takeovers, board, and executive compensation.