Research on the Equity Compensation System of Venture Entrepreneurs

DOI

10.2991/icsshe-15.2015.2How to use a DOI?

Keywords

Venture Entrepreneurs, Equity Compensation, Human Capital and Property Rights, Stock Options

Abstract

There are asymmetric information and moral hazard problems between entrepreneurs and venture capitalists. In order to effectively reduce these problems caused by uncertainty, the paper analysis on the entrepreneur’s equity compensation system. It concretes from the following three aspects: entrepreneur’s compensation plans, human capital and property rights and stock options. First, because venture business has a larger human capital investment, there is no mandatory information disclosure requirement and it has the poor homogeneity of the information. The entrepreneur's compensation plan is an effective means of alternative monitoring and inspiring entrepreneurs. Secondly, entrepreneur’s human capital investment is a special kind of "specific investment". Entrepreneur’s human capital because of its property rights characteristic and physical capital have with the same ownership, control over the right of disposal and usufruct. At last, stock option incentive mechanism can link the long-term growth of the enterprise value and the utility function of risk entrepreneurs. And thus it makes the incentives of entrepreneurs and venture capitalists more compatible.

Copyright

© 2015, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Pingping Liu
PY  - 2015/12
DA  - 2015/12
TI  - Research on the Equity Compensation System of Venture Entrepreneurs
BT  - Proceedings of the 2015 International Conference on Social Science and Higher Education
PB  - Atlantis Press
SP  - 5
EP  - 7
SN  - 2352-5398
UR  - https://doi.org/10.2991/icsshe-15.2015.2
DO  - 10.2991/icsshe-15.2015.2
ID  - Liu2015/12
ER  -