Principal-Agent Analysis On Chinese Private Fund

Private fund is a kind of syndicate investing system in which managers finance from certain investors without public advertisement and operate as a fund. As an important civil investing force of our country, private fund plays an indispensable role in the development of capital market and economy.In this paper, we give a brief introduction of the character and operation of private fund; then we analyzed the importance to develop private fund in China, we focus on analyzing the principal-agent analysis of private 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 fund with a model.According to our research, we found that by profit sharing we can solve the principal-agent problem effectively; we can solve the lemon problems that caused by information asymmetry effectively by encourage investors who have big sum to invest in private fund, small investors will bring free riding Problems , It will do hart to the healthy development of the Private fund industry; the job of participants in the private fund industry is not very stable; the excellent private fund managers favor to the limited partnership generally, the driving ,restraint and choice function which is unique to the limited partnership will promote the development of the private fund.