| As a way to be property right reform of state-owned enterprises, MBO (Management Buyout) now is being closely followed. Since SiTong Corporation finished their MBO, which is the first MBO in China, MBO has been developed in practice. Meanwhile the objection to MBO never stops. In this article, we try to start from the viewpoint of New Institutional Economics. Any enterprise that carries out MBO, we think that a different enterprise system is founded. So we can explain that why MBO is developing so rapidly though it is in dispute.MBO is the behavior that the control right of enterprise property right legally transfers to the inside people (managers and employees), which is a kind of control rights incentive. In a way, MBO goes against the modern enterprise system, because its result is combination of ownership rights and control rights. By taking over the corporation; the managers can own the decision control rights, residual control rights and residual claims. So agency costs will decrease. In fact, MBO is rectification of large agency costs.In China, MBO has sprung up in recent years, which has been taken highly consideration as a valid way of strategic restructure of state-owned enterprises and state-owned capital retreating from competitive fields. In the process of operation, however, many restrictions, such as the constraint of correlative laws and regulations, the immaturity of capital market and the lack of support of national policy, have brought pressure to bear on the management who can only rely on the limited financing methods. Some management takes alternative ways, even the ways violating laws and regulations, which will certainly bring about potential danger to the development of the enterprise and the stability of society. Therefore, this thesis just discusses China's MBO from financial perspective and makes suggestions to perfect China's MBO financing, through the study on the financing modes in foreign countries and the current financing situations in China. |
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