MORAL HAZARD AND THE CONTROLLING MECHANISM IN THE VENTURE-BACKED ENTERPRISE

摘要

In this paper, we compare the characteristics of venture capital in financial contracting theory. We do so by conducting a detailed study of actual contracts between venture capitalists and entrepreneurs. The distinguishing characteristic of VC financings is that they allow VCs to separately allocate ex post control rights. A theoretical base is adopted (based on agency theory) to form research hypotheses which propose that VCs may use different approaches to limit potential agency risks in their investments At last, The structure and process of controlling mechanism is examined in the paper.