风险投资控制权分配与企业家激励:基于质量努力和管理努力的视角

Control rights allocation and entrepreneur incentives in venture capital: A perspective based on quality effort and management effort

企业家的努力对项目的现金流有着重要的影响,本文将企业家的努力分为质量努力和管理努力,并基于此研究了企业家控制、风险投资家控制和条件控制这三种控制权安排中的效率问题。通过建模研究表明:(1)企业家拥有控制权的合同很难达到社会有效率,再谈判虽然能保证企业家控制事前、事后有效率,但再谈判不总是可行的,而且再谈判成本也会造成效率流失;(2)风险投资家拥有控制权时,如果风险投资家获得的支付大于好状态下的清算值,那么合同是社会有效率的,如果风险投资家获得的支付不大于好状态下的清算值,那么合同事前激励为零,事后无效率,最终项目必然清算,股权分配虽然能解决风险投资家控制下的事后无效率并扩大融资范围,但这以牺牲事前效率为代价;(3)条件控制权安排总是社会有效率;(4)风险投资家的保留效用会决定项目的均衡控制权安排,如果风险投资家的保留效用高于一阶努力水平下的社会最优福利,风险投资家控制是均衡的控制权安排;当风险投资家的保留效用小于或等于一阶努力水平下的社会最优福利时,如果再谈判成本趋近于0,则企业家控制是均衡的控制权安排,如果再谈判成本不是无穷小量,则条件控制是均衡的控制权安排。

Entrepreneur′s efforts have an important impact on cash flow of project. On the one hand, a start-up entrepreneur would spend effort and energy to develop or even produce products. On the other hand, the entrepreneur will also spare no effort to deal with project-related affairs and manage the project. Limited source of finance always impels start-up entrepreneurs to seek for venture capitalists. These entrepreneur′s efforts, which are the key factors to determine whether the project will be successful or not, thus arouse much attention from venture capitalists when sign a contract and allocate control rights with entrepreneurs. This paper differentiates between these efforts and divides them into quality efforts and management efforts, and then studies the efficiency of three kinds of control allocations, including entrepreneur control, venture capitalist control and contingent control. The results of the theoretical models show that:(1) contracts that allow the entrepreneur to own the rights of control are hard to achieve social efficiency;though renegotiation can ensure that entrepreneur control is efficient beforehand and afterwards, however, renegotiation is not always feasible, even when it is, the cost of renegotiation would lead to loss of efficiency;(2) when the venture capitalist has the rights of control, and if the venture capitalist gets paid more than the liquidation value under good condition, then the contract is socially efficient;if on the opposite, the venture capitalist never obtains payment greater than such liquidation value, then the contract has no incentive beforehand, nor efficiency afterwards, what is more, the final project would inevitably face liquidation;equity allocation can solve the problem of inefficient investment under venture capitalist control afterwards and greatly expands the scope of financing, however, this is at the expense of the ex-ante efficiency;(3) the contingent control rights allocation is always socially efficient;(4) reservation utility of the venture capitalist will determine equilibrium control allocation of project. If reservation utility of the venture capitalist is higher than social optimal welfare under first-order effort level, then venture capitalist control is an equilibrium control allocation. Otherwise, if such utility is less than or equal to social optimal welfare under first-order effort level, meanwhile, the cost of renegotiation approaches zero, entrepreneur control is an equilibrium control allocation;however, when the negotiation cost is not infinitesimal, contingent control is an equilibrium control allocation.Previous research has focused on the optimal allocation of control rights in venture capital contracts. It has been substantiated that entrepreneur control would achieve social efficiency without considering entrepreneur′s efforts. However, to the best of our knowledge, this result is misleading. On the one hand, merely concentrating on ex-post revenue leads the contract that the entrepreneur own control rights effectively achieve ex-post efficiency rather than social efficiency. On the other hand, the research fails to give the real reason why the contract in which venture capitalist control or contingent control is arranged cannot achieve social efficiency. In this paper, we find that inappropriate entrepreneur′s incentive that contracts impose on is the root of inefficiency after taking quality efforts and management efforts into account. If contracts fail to motivate the entrepreneur to put in first-order quality effort and management effort, then inefficiency arises. A small number of earlier studies also have considered entrepreneur′s efforts when examining optimal control rights allocation. It has been proposed that entrepreneur control cannot achieve ex-ante efficiency in the light of entrepreneur′s efforts. Venture capitalist control and contingent control are also confirmed to be unable to achieve social efficiency when incorporating entrepreneur′s efforts into the model. The research to some extent proves that appropriate control rights allocation is not the valid method to solve inefficiency associated with contract. However, as far as we concerned, the research has not correctly introduced entrepreneur′s efforts into the model since the probability of success which represents entrepreneur′s efforts cannot capture the entrepreneur′s working hard. The entrepreneur not only research markets, develops new product but manage the project. Different efforts lead to very different results and this cannot be captured by a simple proxy variable which measures the likelihood of success. Through a more careful examination on entrepreneur′s efforts, we propose that inadequate quality effort will result in poor quality of project and thus less expected revenue, whilst inadequate management effort directly cause loss of revenue. Consequently, only by allocating appropriate control rights that motivates the entrepreneur to put in first-order quality effort and management effort can the social efficiency be achieved. We corroborate that contingent control is such optimal allocation.This paper has made three main contributions to the current literature on contract theory and control rights allocation. First we provide a new insight into the relationship between entrepreneur′s efforts and social efficiency. By distinguishing between entrepreneur′s efforts, this paper reveals that inadequate quality effort and management effort are the roots of ex-ante inefficiency. Second, we provide a closer investigation on the optimal allocation of control rights. It is shown that entrepreneur control cannot make the entrepreneur put in right quality effort and leads the entrepreneur ex post take opportunistic action. And venture capitalist control may lead the entrepreneur do not put in quality effort and management effort at all. Both of the control rights allocations cannot achieve social efficiency. Only the contingent control is the optimal control rights allocation which can achieve social efficiency. Third, we provide determinants of equilibrium of control rights allocation and factors that influence the entrepreneur′s bargaining power through a comparative static analysis. We are confident that reservation utility of the venture capitalist is the determinant of equilibrium of control rights allocation. The higher the reservation utility is, the hard the entrepreneur retain some of the control rights. When the reservation utility is more than the social optimal welfare under first-order effort level, the entrepreneur must give up all the control rights to obtain finance from the venture capitalist. The profitability of project and investment climate are the primary factors that affect entrepreneur′s bargaining power. The higher potential profitability of project and better investment climate make entrepreneur have more chances to obtain finance and more bargaining power.