Optimality of the 51:49 equity structure

Susheng Wang; Tian Zhu

doi:10.1016/j.econlet.2016.07.003

Optimality of the 51:49 equity structure

Susheng Wang (First Author), Tian Zhu (Participant Author)

Economics

Hong Kong Univ Sci & Technol

Research output: Contribution to journal › Journal

Abstract

As an extension of Wang and Zhu (2005), this short paper shows that the popular 51:49 equity structure can be optimal. This equity structure in joint ventures (JVs) has puzzled economists the world over. We find that, when the two parties are highly asymmetric in their abilities to acquire private benefits from their JV, the 51:49 equity structure is optimal and as efficient as joint control.

Original language	English
Pages (from-to)	270-273
Journal	Economics Letters
Volume	145
DOIs	https://doi.org/10.1016/j.econlet.2016.07.003
Publication status	Published - 2016

Corresponding author email

s.wang@ust.hk

Keywords

51:49 equity structure
Control rights
Income rights
Joint control

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KW - Income rights

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Optimality of the 51:49 equity structure

Abstract

Corresponding author email

Keywords

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