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^*, Tian Zhu

^*Corresponding author for this work

Department of Economics

Research output: Contribution to journal › Journal Article › peer-review

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
Number of pages	4
Journal	Economics Letters
Volume	145
DOIs	https://doi.org/10.1016/j.econlet.2016.07.003
Publication status	Published - 1 Aug 2016

Bibliographical note

Publisher Copyright:
© 2016 Elsevier B.V.

Keywords

51:49 equity structure
Control rights
Income rights
Joint control

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10.1016/j.econlet.2016.07.003

Cite this

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title = "Optimality of the 51:49 equity structure",

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.",

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author = "Susheng Wang and Tian Zhu",

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year = "2016",

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doi = "10.1016/j.econlet.2016.07.003",

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AU - Wang, Susheng

AU - Zhu, Tian

PY - 2016/8/1

Y1 - 2016/8/1

N2 - 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.

AB - 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.

KW - 51:49 equity structure

KW - Control rights

KW - Income rights

KW - Joint control

UR - https://www.webofscience.com/wos/woscc/full-record/WOS:000381834600063

UR - https://openalex.org/W3124547535

UR - https://www.scopus.com/pages/publications/84978794989

U2 - 10.1016/j.econlet.2016.07.003

DO - 10.1016/j.econlet.2016.07.003

M3 - Journal Article

SN - 0165-1765

VL - 145

SP - 270

EP - 273

JO - Economics Letters

JF - Economics Letters

ER -

Optimality of the 51:49 equity structure

Abstract

Bibliographical note

Keywords

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