Chinese Listed Companies. Management Buyout Performance

Management Buyouts became a heat controversy in china, since the MBO has been put in practice among china's listed companies. In my opinion, the core issue of the MBO is whether it improves the performance of china's listed companies or not.This paper adopts Factor Analysis method to analyze whether MBO improve the performance of china's listed companies or not. The empirical analysis of MBO from 1997 to 2004 includes two parts. Firstly, we compare the performance of the target companies and relevant companies, and we find that there are no reasons to support the performance of target companies superior to the performance of relevant companies. Secondly, we compare the performance of the target companies before MBO and after MBO, and we also find that there are no reasons to support the performance of target companies before MBO superior to which after MBO. It is indicated that the performance of target companies were not improved.Then we put forward some reasons to explain it from the point of view of the particularity of the MBO in china. Firstly, the laws and systems relevant to MBO are faultiness. Secondly, the managers of the target companies are opportunistic and they ignore the conformity of target companies. At the end of this paper, we put forward some relevant advices to improve the performance of the target companies.