| In recent years, Management Buyouts (MBO) has been adopted one after another by listed company as a solution to improve the governance structure. MBO has been frequently adopted in foreign countries and has incentive effects. It is thought that separation of ownership and control is a comparatively serious problem on governance of listed company. Through MBO ownership and control can be unified, which helps to improve the efficiency of operating and decision. However, in our country stock of listed company can not be circulate completely, therefore, interests of stockholders circulated and uncirculated are not accordant on operation, investment and financing, dividend policies of listed company. The development of company and interests of stockholders circulated are often ignored. It is worth studying that whether the problem above-mentioned can be solved by MBO and whether MBO will lead to interests of medium-sized investors are infracted. According to the conditions of securities market in our country, in this article the effect on interests of stockholders both circulated and uncirculated which MBO brings is studied in theory and demonstration.As the core problem in financing, dividend police has caught much attention, because it is related with both interests of stockholders and creditor and development of the company. For a long time, it is one of the most disputed problems in western financial research. The traditional dividend distribution theory and the modern dividend distribution theory haven't come to agreement on what dividend policy helps to maximize the interests of the stockholders, however, the MM dividend theory is dominate. So, according to the condition of securities market in our country, this article is based on that theory to structure duality equity model. Then it studies what effect MBO event and dividend distribution event have on the interests of stockholders. By analyzing the characteristics of MBO of listed company in our country, it proposes postulated conditions: (1) The funds repaid for the interest of financing stem from dividend and earnings of transferring of the stock; (2) No dividend taxation: (3) Transferring of stock is priced on net assets. Then constructing the utility function of management stockholders and the stockholders circulated to study the correlation between the utility function and the dividend under the condition of distribution dividend after MBO, equity financing. It is proved that the more dividend, the greater utility of management stockholders is, and the smaller utility of the stockholders circulated is. So, management has high dividend distribution aptitude, which brings damage to the interests of the stockholders circulated.In demonstration, this article studies the dividend distribution aptitude and the abnormal return of the investors. It chooses examples from the listed company after MBO since 2000. These examples are contracted with all the listed companies on the example number of dividend distribution, dividend payout ratio. Then the article studies the change of dividend per share before or after MBO in order to find the effect on dividend which MBO has and the high dividend distribution aptitude. Lastly, abnormal return of the investors in MBO company and high dividend company in1999-2001 is analyzed. Through the study, it is found that: (1) The listed company experienced MBO has strong dividend distribution trend; (2) In 1999-2001, AR(abnormal return) is negative between the declaration date. And it proved that the growth of dividend does damage to the interests of the stockholders circulated. (3) MBO, especially under the duality equity structure, does damage to the interests of the stockholders circulated.MBO is really successful only that the operating efficiency of company is improved virtually and all the participants of MBO maximized their interests. MBO of wealth transferring can not help to improve the company governance and quit of state-owned share. Therefore, this article suggest: (1) Implementing MBO is not rec...
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