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The Behavioral Research And Performing Analysis Of The Listed Companies In China After MBO

Posted on:2008-05-09Degree:DoctorType:Dissertation
Country:ChinaCandidate:R D HuangFull Text:PDF
GTID:1119360242458723Subject:Business management
Abstract/Summary:PDF Full Text Request
Since the advent of the stock company, there has been the existence of the separation of enterprises' ownership and operative right. With the coming of the modern listed corporation, the situation of "separation of two rights" becomes more and more serious. The right hold by the managers level expanded a lot while the capital owners controlling faded gradually, and there came the discrepancy of the managers' targets and the maximum of stock owners' profits. Based on this situation, the capital owners stand quite a high agency cost at the serious threat of their property. Some scandals about American corporations such as ANRAN and SHITONG indicate that there are big shortcomings in the modern company structure, which is based on the "separation of two rights". As a result, the theoretical explorations and practices in the field of cost reduction and investor protection of various kinds of company structure have been the focus among scholars and entrepreneurs.Management Buy-outs, MBO, is that the managers level use the financial leverage to buy the shares of the very corporation, in order to change the corporations' property structure and obtain the controlling right. After the MBO, the managers becomes share holders, obtaining the right of ask-for-surplus and the right of surplus controlling, which is the best indication of management factors and distribution of corporation surplus. MBO is one kind of leverage Buy-outs, and LBO becomes MBO when the tools users are the managers level of the very corporation. And when there is not only the managers level but also the workers involved in the buying, the MBO becomes EMBO or ESOP again. MBO dose not offer a way of property identifying only, but also be a form of manager motivation. Based on the theory of management, MBO actually is in pursuit of the coherence of ownership and operation right, which is an exception to the modern corporation structure. The base for MBO is the problem of agency cost and the low efficiency of management which exist in the modern corporation structure. Through the buy-out of the managers level, the managers take into charge the decision controlling, stocks controlling and right of ask-for- surplus, reducing the agency cost and the restrain of managers' right. And this is also a revision to mere developing targets of scales and diversification caused by modern corporation structure, which is the more completed form of modern corporation structure. However, the carrying out of MBO dose not deny the big impact of the modern corporation structure in the process of corporation evolution. At the base of "separation of two rights" and developed physical economy, the realization of integration of two rights through MBO, shows the character of "improve with times" clearly.MBO has been drawing the attention of domestic scholars these years. And the MBO carried out by Chinese listed corporations is just a beginning and trying. As a result, different methods and samples result in different outcomes according to the researches in existence. There are generally two kinds of research domestically: one is demonstration research, which tends to the practice operation and cases studying, making great sense to instruct the practice; another one is criterion research, illustrating the general sense and property of western MBO cases, or comparison of international experience of MBO.The limitations localization of the domestic research: (1) the shortage of research subjects. The research subjects of the western scholars' MBO research usually amount to more than dozens, while the domestic researches only have 20 samples or so. The lack of studying samples can result in some outcomes with many specialized properties, which can not stand for the general character of MBO. (2) The limitations of research span. Because most of the Chinese MBO cases happened in 2002 and there lacked the comparatively statistical analysis of amounted samples after and before MBO in the past, so we can only focus on the scale integration of corporations and the two-year accounting period after MBO. This time span is too short to cover the long term influence of MBO on the corporation performance and it is hard to discriminate the real value created by MBO and its possible sources. (3) The limitations of research indexes. When there are only researches on profits and cash flows, the turnover ratio of total assets, profits per share, net capital gain and other performance index are ignored, as a result of which the demonstration analysis result is unpersuasive.Generally, this passage has a research on MBO with more samples, longer time span and more indexes. Results as followings:(1) The big change in the MBO corporations' ownership structure is the premise of the realization of entrepreneurs' value. In other word, MBO realize the entrepreneurs' value at the time of changing ownership structure. The realization of entrepreneurs' value motivates the entrepreneurs' spirits largely, which comprises the innovative spirits, risks standing and carving out spirits.(2) There are several conditions needed to be meet in the process of entrepreneurs' action leading to the successful transforming: the required entrepreneurs' spirits; adequate share rights and controlling rights mastered by the entrepreneurs after MBO; looser outer environment; the ability of risks management. There are sides of differentiation and coherence between the corporation behavior and managers' action. The managers level, who are the only executives of corporation performance, executes the operative action in usual in the place of corporation owners. At the same time, the personal action of the managers level leads the action of corporations to some extent. At last the personal wills of the managers level manipulate the wills of corporations. And the entrepreneur's action is reflected by the boards' action, carving out action, investment action and financial action.(3) The board of Chinese listed corporations after MBO is generally smaller than itself before MBO, which has trend of being shrinking. The stability of the board generally decreases after MBO, which indicates the transparent property right and the ease of entry and withdrawing of shares, doing harm to the managers level stability. The intensity of board behavior increases largely, bringing more active controlling over the corporations' operations after MBO. MBO has obvious impact on the relationship between the board stability, board behavioral intensity and the corporation performance. The active influence from the board stability to the corporation performance increases significantly after MBO, saying, the good corporation performance relies much more on the stable managers level. The number of board conferences had a negative impact on the performance before MBO, with more conferences, coming out poorer performances. However, after MBO, the intensity of board conferences is positively related with corporations' performance. Though it is not so eminent in common level, it at least indicates a higher effect than before, which is more closely related to the operation activities.(4) The carving out behavior is the general conclusive conception of innovative activities, adjustment of corporation structure, employee motivation, creation of company culture and brand, intensifying risks management, high-return project investment, reduction of financial cost and many other operation activities, with the purpose of realizing the long-term development and maximum of self interest. After MBO, the increased ownership of managers level raises the competence of strategy altering, which, compared with changes of corporation structure, propel the managers to renew their point of views about the employment contract with inner relationship between corporations' long-term value and the salaries, stimulating the managers to focus their attention to carving out activities which can increase corporations' value. The demonstration research of the difference of carving out activities before MBO and after MBO indicates that: after MBO the profits of share holders and the managers tend to be coherent, with the obvious increasing intensity and competence of controlling; the assurances increase obviously, leading the sharp shooting of the corporations liabilities; corporations' carving out actions are not improved significantly after MBO, because MBO haven't pull the managers to focus those carving out activities which can promote the long-term development.(5) The result of the demonstration research about the differences of corporation performance before MBO and after MBO: the total capital turnover rate has no big changes after MBO, which indicates that the effectiveness of capital is not improved largely; profits rate of total capital , ROE and profits per share decrease significantly, showing that corporations profits ability reduces a lot after MBO. The increasing of research ability and carving out ability will surely improve corporations' profiting ability. However, it's pity that listed MBO corporations do not change their research power and creative power, which can easily been got from thereinbefore analysis.(6) The MBO listed corporations don't finance through share rights often. They strengthen the accumulation of capital and use the accumulation fund to add the shares. Meanwhile, they rely more on the outer finances and loans, with a much higher rate of borrowing. The MBO listed corporations often have a high rate of liability, apparently or recessively. The debtors play a special function in the process of MBO, which has a direct influence on the corporations after MBO to some extent. The investment behavior after MBO becomes the focus of the game of stock capital and liability capital. Both parties will do their effort to make impact on or lead corporations' investment behavior.The creative points of this passage are as follows:(1) This passage will focus on the behavioral difference of pre-MBO corporations and after-MBO corporations and its effect to he corporations' performance from a completely new perspective. And there are some reviews and discriminations of the researches carried out by other scholars. The domestic research on MBO mainly focus on two parts: one is the problem of MBO itself in the process of execution, as model of execution, sources of capital, valuation of assets, information uncovering and supervision of law; the other aspect is to have a research on how will the changes of the corporation structure and stimulating mechanism after MBO affect the corporation performance.(2) This passage points out the mechanism that the MBO affects the listed corporations behavior and performance. It takes the research path that is from subjective to objective and from outer causes to inner reasons. It analyzes the impact of MBO on the entrepreneurs' spirits, which is reflected on the changes of the corporations' behavior and will cause differences in the corporations' performances after MBO finally. It points out the inner relationship between the entrepreneurs' behavior and the corporations' behavior. What's more, it argues about the differentiation and coherence between the behavioral transformation of entrepreneur and corporation.(3) The samples about MBO of this passage are the broadest domestically and the time span is the longest, including the samples of recessive MBO or the MBO characterized shares motivation. The research goes through 3 years before and after MBO, saying, totally 7 years' time span, which can give a relatively long time to research on MBO's impact on the listed corporations' performance. The other domestic researches' limitations are reflected in the research subjects, research span and research index. This passage has some explorations and contributions in the field of overcoming these shortcomings.(4) This passage carries out a research on the corporation board behavior, carving out behavior, financial behavior and investment behavior of the listed corporations after MBO and before MBO. Based on large amount of demonstrative data gained from annals, this passage expands the definition of carving out behavior and analyzes the inner relationship between the entrepreneurs' spirits and carving out behavior. It innovatively defines some indexes reflecting corporations carving out behavior, and analyzes the differences of these indexes before and after MBO and their inner relationship with corporations' performance. At last, it comes out some objective conclusions and comments of listed Chinese MBO corporations.
Keywords/Search Tags:MBO, Entrepreneurs' spirit, Entrepreneurs' behavior, Corporations'behavior, Operating performance
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