Chinese Listed Companies Management Buyout (mbo) Performance

As a new form of assets restructure, MBO (Management Buy-outs) was popular in Europe and the U.S in the 1980s. With the immense reform of structure of governance of legal representative in the 1990s, MBO displayed a global tendency. In the last decade, because of the deepening reformation of company, structure adjustment, more drastic competition, MBO (Management Buy-out) has been developing rapidly in our country. It has become one of the most important means of assets restructuring and resources re-collocation. Because of their complexity and the diversity, there have been few examples of MBO. Moreover, it is also due to immature circumstance of the Chinese economic system, domestic MBO are restricted by various more factors in contrast with overseas MBO.As far as MBO are concerned, either the enterprise's state ownership (Russia), or other private ownership (USA) or both (UK & France) falls within the scope of their business. On account of its special features of the reform of China's economic system, at the present time those enterprises that have executed MBO basically put state ownership on target. Therefore, in this paper domestic MBO refers to enterprise's state ownership.As a system innovation, MBO have positive functions in effective management of enterprises, decreasing of agent capital, distinguishing relationship of ownership and regulating corporate governance. MBO have offered an outlet for the withdrawal of state-owned capital. Because Chinese MBO is still in their incipient stage of development, this paper is intended to make a systematic research on Chinese enterprise's MBO in order to offer some insights and strategies for domestic MBO based on the 21 samples of listed company on Shanghai and Shenzhen Stock Markets.This article, beginning with ownership, analyses the theory of MBO based on theories of contract, entrepreneurs and human resources. Then, it compares the MBO in Europe, America, Russia and East Europe and analyses the process of the MBO in our country and its current status. Subsequently, there comes an analysis of favorable factors that MBO can improve the performance and with findings that it can bring Pareto optimum result during the game between principal and agent; and that it can screen the talent of the management. On this basis, Study is made on the performance of the MBO companies. To avoid the limitation of single indicator, several financial indicators are chosen which can reflect the performance and a function is established to appraise the general performance of the company. Through empirical research, it is found that the performance of MBO companies is not better than they were before. On the contrary, there is a little decline in its performance. An analysis is made on the cause for this result with an conclusion that, at the present specific circumstances, it is not proper that MBO should be executed among listed companies all at once but rather gradually spread out on the basis of trial execution of MBO. Finally, in order to deal with the problems occurring in listed companies' MBO at the current economic situation, this article offers some strategies on perfecting the MBO in our country.