Browsing Centres by Subject "venturekapital"
Now showing items 1-1 of 1
-
Keuschnigg, Christian; Nielsen, Søren Bo (København, 2003)[More information][Less information]
Abstract: In this paper we set up a model of start-up finance under double moral hazard. Entrepreneurs lack own resources and business experience to develop their ideas. Venture capitalists can provide start-up finance and commercial support. The effort put forth by either agent contributes to the firm’s success, but is not verifiable. As a result, the market equilibrium is biased towards inefficiently low venture capital support. The capital gains tax becomes especially harmful, as it further impairs advice and causes a first-order welfare loss. Once the capital gains tax is in place, limitations on loss off-set may paradoxically contribute to higher quality of venture capital finance and welfare. Subsidies to physical investment in VC-backed startups are detrimental in our framework. Keywords: Venture capital, capital gains taxation, double moral hazard. JEL-Classification: D82, G24, H24, H25 URI: http://hdl.handle.net/10398/6821 Files in this item: 1
wplefic032003.pdf (694.8Kb)
Now showing items 1-1 of 1