The Study About How To Control The Agent Risks In Zhejiang, East China Sea Venture

In this paper, the survival of Zhejiang, East China Sea Venture was used as a case, and the research focused on this agency problem of the private equity fund and its underlying causes. Finally, the paper put forward my views and suggestions about how to control and restrain these issues effectively.In general views, the principal-agent problems arise mainly due to the economic man hypothesis,uncertainty and asymmetric information. The agency problems final performance as adverse selection and moral hazard. In the private equity funds of East China Sea Venture, they created the complex agency problems between them, the reasons due to financial investors'extreme distrust to administrators and managers inappropriate compromise. And brought the entire operation of the Fund barriers greatly, and lead to its ultimate defeat. It can be seen by analysis, East China Sea Venture agent both has the factors of geographical and cultural characteristics, and there is also unsound social and legal system of the environment. In this paper, the East China Sea should be how to improve and control the venture of two types of proposals and views had been put forward, mainly discussed from the two areas of incentive and restraint mechanisms.Private Equity Fund in China is an emerging industry. The rapid development of China's economic take-off has a remarkable sense. However, due to the immaturity of the industry, the problem cannot be ignored, especially the principal-agent problems between LP and GP, which has become a bottleneck for further development in this industry. The fundamental reason why East China Sea led to destruction is that venture capital agency problems. It embodies the principal-agent problem with the industry representative. Based on the discussion, expectations the research can provide some relevant references to others in the field, and to contribute to the overall development of Private equity funds.