Chunlan XU, a PhD student in the Department of Finance at Southern University of Science and Technology (SUSTech), presented her joint paper with Professor Zhaojun YANG, titled “Dynamic Incentives for Screening and Monitoring in Private Equity Funds,” at the 2026 China International Conference in Finance (CICF). 

Chunlan XU shared the core findings of their research in detail and had in-depth discussions with scholars on cutting-edge issues in continuous-time contract design. Due to her excellent performance during the review, she was selected by the conference’s Academic Committee to receive a CICF-JFQA Dual Submission recommendation.

Chunlan XU’s study addresses the dual role of general partners (GPs) in private equity markets (GPs tasked with both screening and monitoring projects) and reveals that these two functions induce two fundamentally distinct incentive problems; screening which demands high performance thresholds and monitoring which requires continuous risk exposure. The optimal contract balances waiting for good performance to trigger rewards, retaining manager equity, and dynamically adjusting dividend thresholds. It provides a unified theoretical explanation for core contracts in mature markets like vesting, hurdle rates, and clawbacks. It also offers a fresh analytical framework and theoretical support for improving compensation design and setting up institutional safeguards to prevent moral hazard in the private equity industry.

This study is one of the phased achievements of the National Social Science Fund of China (Grant No. 25&ZD124), “Research on the Innovation of Sci-Tech Finance Models with Chinese Characteristics.” It reflects the project team’s continuous accumulation in the fields of corporate finance and contract theory, and provides new perspectives and analytical frameworks for understanding the dynamic incentive mechanisms in the private equity market. 

CICF is one of the world’s top four international finance conferences, alongside the American Finance Association (AFA), the European Finance Association (EFA), and the Western Finance Association (WFA). This year’s conference was held in Hong Kong from June 26 to 29, receiving 2,107 submissions worldwide, with 257 accepted. For the first time, CICF jointly introduced a dual-submission mechanism with the top international finance journal Journal of Financial and Quantitative Analysis (JFQA), and 71 papers were recommended for review in JFQA. 

Paper Link: https://ssrn.com/abstract=6854759