A Research On Financial Governance Of Private Equity Funds

Based on the background of the rapid development of domestic private equity investment fund industry in recent years,this paper analyses the imperfect financial governance mechanism of PE institutions.In recent years,the regulatory authorities have brought great challenges to the development of PE market through a series of policies and measures.In particular,a series of new capital management regulations issued in 2018 not only make it difficult to raise funds,but also put forward new requirements for the internal governance of PE institutions.The internal governance of PE fund institutions,that is,to improve the governance structure through internal control,financial incentives and other means to eliminate the problems caused by the principal-agent relationship,has always been an important issue of common concern to the industry and academia.Internal governance of PE institutions,especially eliminating the principal-agent problems of PE in project selection,fund raising,post-investment management and other aspects through a series of financial governance measures,is an important issue that must be paid attention to in practice,and also an important institutional guarantee to promote the stable operation of PE institutions and improve their overall financial returns.In this paper,the financial governance mechanism of PE institutions is discussed comprehensively through theoretical analysis.Firstly,based on the research results of corporate governance and the characteristics of PE industry,we discuss in detail the principal-agent relationship network formed by the interweaving of multiple principal-agent relationships in PE institutions and the problems arising therefrom,and put forward the special problems faced by PE institutions in improving their financial governance mechanism.On this basis,this paper combines the content,means,effectiveness and problems of PE financial governance in practice,and puts forward the basic principles and main contents of establishing or improving financial governance mechanism.Finally,this paper also discusses the application of the main ideas in practice through case study.The main conclusions of this paper are as follows: Because there are multiple principal-agent relationships in PE business caused by information asymmetry,and these principal-agent relationships are interrelated,forming a network of principal-agent relationships,PE institutions must adhere to the principle of comprehensive governance when designing financial governance mechanisms,taking into account the financial incentives and constraints mechanism in the governance of the entire principal-agent relationship.At the same time,the role of the network should be combined with its own development,focusing on the key issues at that time,and gradually improve its financial governance mechanism.In addition,PE institutions should combine financial governancewith non-financial governance in order to design an effective financial governance mechanism.This paper can enrich the research literature on the financial governance of PE institutions,and put forward the basic principles and main contents of establishing or improving the financial governance mechanism of PE institutions,which can provide some reference for domestic PE institutions to establish or improve their financial governance mechanism.