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Chinese Journal of Management Science

Chinese Journal of Management Science >

2023 , Vol. 31 >Issue 7: 91 - 102

DOI: https://doi.org/10.16381/j.cnki.issn1003-207x.2021.1619

Articles

The Mechanism and Solution of Equity Gap in Private Equity Market

  • NI Xuan-ming ,
  • QIU Yu-ning ,
  • ZHAO Hui-min
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  • 1. School of Software and Microelectronics, Peking University，Beijing 100871, China；2. School of Business, Sun Yat-sen University, Guangzhou 510275, China

Received date: 2021-08-16

  Revised date: 2021-11-29

  Online published: 2023-07-17

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Abstract

Equity gap has always been a practical problem that can not be ignored in the development of private fund market. From the perspective of cooperative game, a model based on Shapley value is constructed, to describe the formation of equity gap and explore the corresponding solutions. It is found that insufficient money supply, insufficient demand of target enterprises and inefficient allocation are the three main reasons for the formation of equity gap. Insufficient supply means that the investment willingness of LP is low, insufficient demand means that the market is lack of high-quality enterprises, and inefficient allocation is manifested in the mismatch between supply and demand caused by GP. Meanwhile, a method is given to distinguish the causes of equity gap. For different causes, the government can effectively make up for the equity gap by direct or indirect means, such as introducing government-sponsored venture capital, promoting the development of enterprises through tax incentives, and enhancing information disclosure to improve GP’s recognition ability. Although promoting the quality of enterprises is a slow process, it helps to realize the virtuous circle of capital market and enterprise development, and make technology be the source of economic growth.

Key words： equity gap; private equity; cooperative game; Shapley value

Cite this article

NI Xuan-ming , QIU Yu-ning , ZHAO Hui-min . The Mechanism and Solution of Equity Gap in Private Equity Market[J]. Chinese Journal of Management Science, 2023 , 31(7) : 91 -102 . DOI: 10.16381/j.cnki.issn1003-207x.2021.1619

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