Research On Management Buy-out In State Owned Enterprise

As a mechanism innovation, Management Buy-out (MBO) would play a great role in adjusting industries structure, clarifying the property right of the enterprise, decreasing business cost and reducing the cost of the principal-agent in the state-owned enterprise. Based on the property right theory, principle-agency theory, corporate governance theory, incentive theory, human capital theory, and entrepreneur theory and with the game theory as the main research tool, this paper make a study about reforming state-owned enterprise property right, perfecting the corporate governance and building incentive and restraining mechanism for management during the MBO application. Firstly, we study the effectiveness of MBO in state-owned enterprise property right reform and corporate governance perfect. Through the analysis of the hotspot problems of the state-owned enterprise reform in 2004, we propose the five new problems in the property right and corporate governance. Through the systemic analysis of the state-owned enterprise property right reform in different countries, we summarize that there are four key success factors in the property right reform, which can be used as the measurement indexes to measure the effectiveness of the MBO in state-owned enterprise property right reform. Furthermore, we also analyze the effectiveness of the MBO in corporate governance perfect from different aspects including principle-agency, human capital, entrepreneur value and incentive and restraining mechanism of the management. In our analysis, which includes both theoretical analysis and practical analysis with typical cases of MBO application in China, we demonstrate that MBO is effective and efficient in the state-owned enterprise reform. Secondly, with the game theory as a main research tool, we make both static complete information and incomplete game analysis of the incentive effect of MBO and how to watch and control MBO trade with the analysis of the sell-buy game model and censor-deceive game model. We declare that MBO is an effective incentive mechanism which can completely inspire the management passion and management genius of the entrepreneur so that they can both realize their personal value and heighten the revenue of the country which is a win-win status. Simultaneously, during the application of MBO, it is necessary to make an effective examination with low cost and high punishment. Finally, we study the difficulties of the MBO during its application and implementation in China, which include both property right problem and corporate governance problem. To provide the solution, we make a systemic conclusion of state owned enterprise reform in the different countries and propose eight important references for the MBO solution. During the implementation of MBO, the loss of the state-owned assets is a key problem, in some extent, it has hindered the widely implementation of MBO in China. Firstly, this research proposes several measures to effectively protect the state-owned asset from being lost. We declare that although there exit different problems and difficulties in the application of MBO, it is an effective and efficient tool to solve the property right problem in the state-owned enterprise if we can find out a proper MBO model of China. Moreover, although the property right problem is the rootstock of the corporate governance problem in the state owned enterprise, after the property right, the perfect corporate governance must be built, which is the same with the MBO application. To successful apply the MBO in China state-owned enterprise reform, we must perfect the corporate governance after MBO implementation.