Discussion Paper Details

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Title: Taxation and Venture Capital-Backed Entrepreneurship

Author(s): Christian Keuschnigg and Soren Bo Nielsen

Publication Date: October 2003

Keyword(s): double moral hazard, entrepreneurship, taxes and venture capital

Programme Area(s): Public Economics

Abstract: 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.

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Bibliographic Reference

Keuschnigg, C and Nielsen, S. 2003. 'Taxation and Venture Capital-Backed Entrepreneurship'. London, Centre for Economic Policy Research.