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The Informational Asymmetries & Venture Capital Contracting Technology

Posted on:2004-12-09Degree:DoctorType:Dissertation
Country:ChinaCandidate:W H ChengFull Text:PDF
GTID:1116360095962667Subject:Political economy
Abstract/Summary:PDF Full Text Request
The behavior of investment and finance in venture capital involves the dual principal-agent relationships. There is the relationship between investors and venture capitalists and the relationship between venture capitalists and entrepreneurs, which is described by a branch of the theories of the neo-institutional economics. Through contract, the design with mechanism encourages to reduce the loss of principal. Informational asymmetries are the key concept in contract theory, are also the most prime cause of transaction contract design. This agency issue of investor and venture capitalist can be effective to guard against the morals hazard of venture capitalist by limited partnership system; Venture capitalist can guard against the morals hazard of entrepreneur through contract , which is optimal capital-structure contract in financing decision , is combining to equity fraction , stock design and staging finance , in order to make enterprise financing cost minimum , profit maximum, it is minimum that informational asymmetries' level fall to. Also namely, in the given opportunity cost of investment that venture capitalist use staging investment pattern under the condition of opportunity cost, share with entrepreneur, and select the form of debt or equity. This paper, from related document exposition, I get the hint of staging investment about capital structure contract and establishes a more simple model, in each stage of venture enterprise's quit , have designed the optimal equity proportion contract between venture capitalist and entrepreneur , through raising the effort level of entrepreneur reduce informational asymmetries, and reach conclusion: in first stage , the equity proportion of venture capitalist optimal fraction is 0.5, in the following stage ,the equity proportion of venture capitalist tends to increase. This viewpoint is different from Admati & Pleiderer (1994 ) , they think: Optimal contract is that venture capitalist maintains the stock of fixed fraction in every stage, it can eliminate the motivation of the morals hazard of entrepreneur, at the same time, in this paper ,I have also analyzed the mistake of domestic scholar about equity proportion of venture capitalist . This paper has analyzed venture capitalist how to minimum to select optimal capital structure to reduce informational asymmetries; And for appearing of IPO, which venture enterprise has carried out in economic analysis. According to the venture capital of our country, this paper administers defect factor of governance structure system from venture capital to analyze the obstacle of the development of our venture capital, and make suggestion to the contract design of the venture enterprise of our country and the system arrangement of structure for the venture capital.
Keywords/Search Tags:Information Asymmetries, Venture Capital, Contract
PDF Full Text Request
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