Risk Prevention Measures for Private Equity in China

This paper analyzes the development of private equity in China, and points out that the risks of PE contains inherent risks including adverse selection and moral hazard, and external risks including the executive risks, legal risks and withdrawal risks. Furthermore, this paper puts forward risk-preventive methods and suggestions, where the government shall spare no efforts to perfect laws and regulation, improve administrative efficiency, establish an efficient supervision system and multi-level capital market. Meanwhile institutional investors should increase their awareness of risks and prevent the agency risk effectively.