A Case Study Of Gree Electric Appliances Implicit Management Buy-Outs

In 2013,the third Plenary Session of the 18th CPC Central Committee pointed out the reform of introducing mixed ownership to state-owned enterprises.In July 2016,The SASAC announced the abolishing and invalidation of the Interim Provisions on The Transfer of State-owned Property Rights to the Management of Enterprises,then a large number of listed state-owned enterprises were changed into enterprises without actual controller.In this case,it is necessary to explore the way which management used to change the nature of the enterprise into no actual controller by implicit management buy-out,and its influence on stakeholders and the development of the company.So as to clarify whether implicit management buy-out is an effective means for the mixed-ownership reform to state-owned enterprises.Gree Electric Appliance co,which completed mixed-ownership reform through implicit management buy-out,has created a precedent of transferring and giving up control of high-quality state-owned assets,which has great research value.The article first take implicit management buy-out as the core,sorted out the relevant research results and legal system.Give the definition of explicit and implicit MBO and the criteria of corresponding behaviors,based on theories like ultimate control.Then take Gree Electric Appliance as a study case of implicit management buy-out by dividing the event into two stage,respectively comb the major events and corresponding ownership structure of Gree Electric Appliances before the implicit management buy-out,and analyzes the methods of implicit MBO from the perspectives of control right and cash flow right based on the pyramid shareholding structure in ultimate control theory.Then,from the perspective of stakeholders,pointed out that the implicit management buyout of Gree Electric Appliances,which is in a fully competitive industry,can promote SASAC to effectively implement classified reform,maintain and increase the value of the state-owned assets,complete the strategic transformation to capital management.Enable the management to gain the ultimate control of the enterprise,improve the level of compensation incentive,get rid of the shackles of the state-owned enterprise system,and give better play to the entrepreneurship.Participating in Gree Electric Appliance’s implicit management buyout can improve Hillhouse’s investment layout in manufacturing industry and guarantee its long-term interest.Meanwhile Gree Electric’s high dividend policy can not only covers its annual interest,but also protects its short-term earnings.Then analyze the economic consequences of Gree Electric Appliances implicit MBO by analysing financial indicators,economic value added,and stock price changes of the company.Finally,drawn the enlightenment of Gree Electric Appliance’s implicit MBO from the national strategy level and enterprise strategy level,hoping to provide reference experience for the state-owned enterprises planning to adopt the implicit management buyout.The innovation of the article is,not limited to the definition of a management buy-out,but from its essence,points out that it is a kind of implicit MBO that the management adopts the pyramid ownership structure design to change the enterprise into an enterprise with no actual controller and obtain the ultimate control of the enterprise.By analyzing the influence of this approach on SASAC,management,private equity funds and the company’s financial performance,value creation ability and stock price,point out the positive significance of implicit management buy-out by commercial state-owned enterprises,hoping to provide reference for the sustainable development of enterprises without actual controllers controlled by professional managers.