The Efficiency Analysis Of MBO, Problems In Operation And Its Long-term Outlook In China

MBO (Management Buy-Outs) is a important style of LBO(Leverage Buy-Outs) which was first happened in England during the great economic depress in European countries 60's of 20 century. MBO gave the managers a chance to establish their own business and actualize their own personal worth. And as a new way to reconstruct a company, it was help in upping the performance of the target company in many ways. It has been proved that MBO is practical in decreasing the cost of agency, motivating the insiders and promoting the performance of business, and so on.1999, as Stone Corp. carried out their reconstruction with MBO, MBO as a way of reconstruction was known by Chinese business circles and academic circles. Approvers think that it can play a positive role in our economic situation, such as improving the structure of property rights, promoting the efficiency of our capital market, actualizing the value of human resources and constructing a effective mechanism of motivating.Actually, operating of MBO is not very good. Problems that have happened in the operating are followed: many prices of buy-out are not equal to the real value.of assets and caused great lost of state property, managers carried a black case work with the advantages of asymmetric information, it's not very clear where the capital fund came from and can not guarantee the validity of the buyers.To avoid the lose of state property, the finance ministry called the MBO stop in April 2003. SASAC (State-owned Assets Supervision and AdministrationCommission of the State Council) has been established in August 2003, and there are more and more announcement of listed company indicated that they are involved into the tide of MBO. During the period of the end of 2003 to the beginning of 2004, SASAC published several documents and made some rules for MBO. The publishing of these documents indicated MBO is relatively new to us, although it is a new way to stimulate managers and reforming our state companies we do not have enough experience and system to operate it well.In this dissertation we will have a intensive study of MBO in China. The first section is the comprehend of MBO; The second section focus on the validity of MBO, contains the role in the reform of state company and an empirical study of MBO in China. The third section is the study of necessity and feasibility of MBO in China. The fourth section is an intensive study of the problems happened in China and solutions. The fifth section analysis the conformity work after MBO. And the sixth section is the prospects of MBO in China.