Research On Control Rights Of Venture Enterprise Based On Incomplete Contract Theory

With the continuous development of entrepreneurship economics, the economic efficiency and the development of new industry have been significantly enhanced by the combination of Venture capital and entrepreneurs, then people's attentions to the venture capital are rapidly increasing. In order to accelerate venture firm's development and increase the venture capital's profits, study of venture enterprise governance is very important. However, the disaccord of aim between investors and entrepreneurs cause the conflict of interest, so the problem about control rights allocation is presented. As an important part of venture enterprise governance, such problem has become a hotspot in economics.Firstly, this paper introduces the basic concepts and content of venture capital and then the theoretical foundation about incomplete contract, information economics and principal agent. According to the current research results at home and abroad, we built the analytical framework of control rights allocation about venture enterprise. At last, based on the theory of incomplete contract, we construct the models to analyze the influence factor and its leading effects of control rights allocation and derive the last conclusion. Variables representing the benefit of entrepreneurs and the supervisory cost of investors are introduced into the models. Through studying the correlations of these variables, control rights allocation's effect is clarified, that will promote the improving of enterprises'management and help venture capital making decisions.