Taxation and Venture Capital Backed Entrepreneurship
University of St. Gallen Economics Discussion Paper No. 2003-17
34 Pages Posted: 13 Oct 2003
Date Written: September 2003
In recent years, venture capital has increasingly become a factor in the financing of new firms. We examine how the value of mature firms determines the incentives of entrepreneurs to start up new firms and of venture capitalists to finance and advise them. We examine how capital gains taxes as well as subsidies to start-up costs of new firms affect venture capital backed entrepreneurship. We also argue that dividend and capital gains taxes on mature firms have important consequences for start-up firms as well.
Keywords: Taxes, venture capital, entrepreneurship, double moral hazard
JEL Classification: D82, G24, H24, H25
Suggested Citation: Suggested Citation