The Optimization Of Fund Contract In The Perspective Of Governance Structure

Since the establishment of formal fund industry in our country in the early1990of the20th century, it has achieved rapid development in China. The amount of Fund management companies is increasing, the size of the Fund is expanding, and there are more and more types in the Fund.Fund industry plays an increasingly important role in China’s capital market. While the fund industry makes rapid development, a series of issues has gradually exposed, one of the most important issues is the problem of internal motivation in the management and operation of the Fund. The issue has also been the focus of scholars at home and abroad in recent years. Due to fund managers and fund investments, there is an information asymmetry between investors and managers. Investors could not observe the level of effort of fund managers,and fund managers most likely have the moral hazard and damage the interests of investors. With the development of the principal-agent theory and professional practice of manager’s holdings AG, base incentive mode of becoming scholars and research directions, while a growing number of fund companies also use this incentive model.Based incentive mode in study on internal motivation problems in fund management companies took a major step in, fund managers do not take risk into risk shared with investors of the investment operations of the Fund. This in holding base incentive mode of based Shang, further will fund manager of holding base share set for common stock, General investors of holding base share set for preferred shares, so fund management company traditional of shareholders-career Manager type governance structure changes for priority unit shareholders-common stock shareholders type governance structure. To the investors, Fund Manager firstly undertakes the risk of loss. The optimization of fund contracts made external governance structure of remains the same. But the fund’s internal governance structure have a fundamental transform.Thus, the traditional relationship between the investors and fund managers is priority shareholders and ordinary shareholders, not shareholders and agent. The optimization gives a more effective solution to incentive-constraint problem in the Fund internal management operation. There are two functions at least in the shareholder transformation of fund managers. One is the correctional function to the opportunism behavior of Fund managers, the other one is the screening to the capability of Fund managers.