Optimality of the 51:49 equity structure

Susheng Wang and Tian Zhu

Economics Letters, 2016, vol. 145, issue C, 270-273

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.

Keywords: Income rights; Control rights; 51:49 equity structure; Joint control (search for similar items in EconPapers)
JEL-codes: D23 D82 L22 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:270-273

DOI: 10.1016/j.econlet.2016.07.003

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