The Research On The Principal-angent Problem And Profit Distriburion Of Private Fund In China

Although in recent years, private funds in China has been developed very rapidly, Private investment as an important strength, It plays an irreplaceable role in the development of the capital market in China and even the national economy. There are also many problems arising with the development of private funds, especially the principal-agent problem. As of the different profit target and the problem of Asymmetric information, there may some risks between the investors and the managers in private fund, such like moral risk and chosen risks. The paper has paid attention on the principal-agent problem and the profit distribution.We first review the past researches on the principal-agent problem of private funds. Then we analyze the present situation of the private funds in China; explain the chosen risk and moral risk. To solve this problem, we use a basic model about principal-agent problem. The result of the model is:the principal can sign a contract with the effect of Incentive earnings, which can motive the private funds managers to work more effectively and harder. Under such contract, the manager can achieve a maximum earning for both the investors and the mangers.We can see the earning distribution problem is in the principal-agent problem. We discuss the earning distribution problem in the next chapter. There are three different profit apportioning options in china:the fixed earning, just profit apportioning and the profit allocation and the fixed earning. The last one is the best one. because this option can motivate the manager to achieve the best profit.In the end of the paper, we analyze 384 private funds and find:Average annual rate of return under the option of profit allocation and the fixed earning is the highest.