A Reply to Douglas Cumming’s 'Review Essay: Public Policy and the Creation of Active Venture Capital Markets'

Venture Capital: An International Journal of Entrepreneurial Finance, Forthcoming

4 Pages Posted: 7 Nov 2010

See all articles by Marco Da Rin

Marco Da Rin

Tilburg University, Department of Finance; Tilburg Law and Economics Center (TILEC); European Corporate Governance Institute (ECGI)

Giovanna Nicodano

University of Turin - Department ESOMAS; Collegio Carlo Alberto

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato

Date Written: October 1, 2010

Abstract

In Da Rin, Nicodano, and Sembenelli (2006) we evaluate the effectiveness of different public policies for venture capital using an econometric approach that allows to overcome several well-known flaws of purely cross-country studies. Our results cast serious doubts on the widespread illusion that channeling more funds would create more active capital markets, while they support the use of capital gains taxation and the creation of a stock exchange for exiting investments. Cumming (2010) criticizes our methodology and results. In this short note we reply to his criticisms and show why they are based on a misunderstanding of our methodology.

Keywords: Venture Capital, Entrepreneurship, Public Policy, Capital Gains Tax

JEL Classification: G24, G28

Suggested Citation

Da Rin, Marco and Nicodano, Giovanna and Sembenelli, Alessandro, A Reply to Douglas Cumming’s 'Review Essay: Public Policy and the Creation of Active Venture Capital Markets' (October 1, 2010). Venture Capital: An International Journal of Entrepreneurial Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1703578

Marco Da Rin (Contact Author)

Tilburg University, Department of Finance ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Giovanna Nicodano

University of Turin - Department ESOMAS ( email )

Turin, 10134
Italy

HOME PAGE: http://https://www.carloalberto.org/person/giovanna-nicodano/

Collegio Carlo Alberto ( email )

Piazza Arbarello 8
Torino, Torino 10121
Italy
390116705006 (Phone)

HOME PAGE: http://https://www.carloalberto.org/person/giovanna-nicodano/

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 670 6059 (Phone)
+39 011 670 6062 (Fax)

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