Government Oversight Failure In Management Buyouts In China

As governor of social affairs and leader of economy, government should undertake its own functions and the supervision is one of functions. However, government can't supervise sufficiently because of lagged administrative reform, even supervision is invalid. It arouses many questions, and we can find these questions in MBO of state-owned enterprises. MBO is a way to be property right reform of enterprises as our country's economy develops fast and market-economy reforms deeply. MBO was born in the Occident and its goal is to lower agent fee and improve enterprise's operation efficiency. In fact, this reform in the Occident optimizes allocation of resources, boosts enterprise's development, and brings lots of benefits. However, MBO is in dilemma in our country because of invalid supervision. MBO brings many problems such as the decreasing of state-owned property, the suffering of small shareholders interests and official's corruption. It arouses academe and publics' attention. We discuss invalid government supervision in MBO, and conclude four main reasons: lagged and absent interrelated law and criterion, economic man, low supervision efficiency, and finite government and officials' ability. We have two ways to solve invalid supervision. One is that government should perfect all kinds of systems and exert its ability independently. The other is government should recur to exterior force. It is differ from researching MBO in economics and the innovation is analyzing reasons and solutions of invalid supervision in MBO from the point of view of government supervision in order to exert its supervisory function. Of course, we should research and perfect all kinds of measures in further in operation.