A Study On The Principal-agent Mechanism Of Venture Funds

Venture capital plays an important role in the transition of technology and thedevelopment of high-tech industry. In only a few decades, it has become a significantform of investment and gained vigorous support from the governments in manycountries. Indeed, it has become a historical trend globally.Because of a great uncertainty and asymmetrical information in venturecompanies, investors can hardly evaluate their value, supervise and controlentrepreneur moral hazards, venture funds are developed in order to improve theasymmetry of venture capital through the scale and professional advantages ofventure capitalists in collecting information. It is regrettable that venture capitaltransforms investors from investing directly to investing indirectly and causes doubleprincipal-agent problems to make principal-agent relations more complicated.In some countries and regions, venture capital has developed greatly andaccumulated rich experiences. It has been demonstrated that although there are doubleprincipal-agent problems in venture funds, they can be solved by corporategovernance institutions. Under these circumstances, both the special skills of venturecapitalists and the management skills of entrepreneurs can be brought into play, highrisks can be avoided and enormous profits can be gained. Therefore, study on theprincipal-agent mechanism of venture funds is important to the improvement ofventure capital theory and meaningful in guiding our venture capital development.Scholars from domestic and abroad have done much research on the singleprincipal-agent relation but little on double principal-agent relations synthetically.Although many scholars study the double principal-agent relations of the three sidesof venture funds from the perspective of asymmetry of information, they study theprincipal-agent of two parties separately and do not joint three sides together. On thebasis of Cobb Douglas production function, for the first time, this dissertationproposes trilateral-games model from the perspective of corporate governance, makestwo double principal-agents connect closely and creates a logic analysis frameworkabout venture funds principal-agent mechanism. Based on management, economics,game theory and economics of new institutions, this dissertation proposes theconcepts of Corporate Governance Equivalent Curve and Corporate GovernanceBenefit, and studies venture funds principal-agent mechanism from corporategovernance.According to corporate governance border and venture capital life circle, venture...