Abstract: Given partially available market demand information, the valuation adjustment mechanism(VAM) problem between a risk-averse retailer and a private equity investment institution(PE) is studied. This paper constructs a decision model based on the worst-case conditional value at risk(WCVaR) criterion, discusses the value of VAM in enterprise operation management by comparing with the decision and utility of the case without VAM, and reveals the impact of the retailer' risk aversion behavior on the execution process of VAM. The results show that entry into a VAM has a certain incentive effect on the retailer, but the incentive effect will be weakened by the retailer's risk aversion behavior. There exists a critical interval for the retailer's risk avoidance degree, within which it becomes easier for the investment and financing parties to cooperate. In addition, the high valuation in the process of entering into a VAM will reduce the effort level of the retailer, and high financing amount will lead to over-incentivization, both of which are not conducive to the development of financing enterprises. Enhancing the growth and profitability of enterprises is the key to achieving a win-win situation and helping enterprises to grow rapidly.

Key words: valuation adjustment mechanism, risk-averse, partial demand information, worst-case conditional value at risk