Principal-agent Analysis On Chinese Private Equity Fund

Private Equity Investment is a financial innovation under new economic situation,which highly contributes to the transformation of saving to investment,the cultivation of multi-hierarchy capital market,the reduction of financial risk,and the, promotion of hi-tech industry.It is proved by the practice of U.S.,Europe,Japan and other developed countries.China,who is in a emerging and transition economic development stage,is in urgently need of speed of speed up the upgrading of the industrial structure and buinding an innovation-oriented country. So china will develop lots of innovative companies and exercise large-scale corporate, mergers and reorganizations.But the financial funtion of the existing financial market and organizations could not provide effective support.Especially under the influence of the global financial crisis,chinese innovative companies'funding problem is more prominent.international experience shows that private equity market and private equity funds can provide funds for the growth of innovative companies and corporate mergers and reorganizations,private equity funds have became the second important financing channels in developed countries,only after bank loans and IPO.Nowadays,china's private equity funds is in a budding development stage,theoretical circles are not yet clear about the concept,connotation,location,governance mechanism,external supporting environment,promoting patterns,organization forms,supervision modes of chian's private equity funds,which cause a low proportion of private equity funds in china's financial structure,and can not adapt to the needs of industrial innovation and economic restructuring. so researching the development problem of china's private equity fund has an important theoretical and practical significance.In this paper, we give a brief introduction of the character and operation of private fund; then we analyzed the importance to develop private equity fund in china, we focus on analyzing the principal-agent analysis fund with a model,and from the model we find the way how to solve the information asymmetry problem,at last we analyzed the effect of limited partnership on private equity fund with a model.