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The Capital Gains Tax: A Curse but Also a Blessing for Venture Capital Investment

Carolin Bock and Martin Watzinger ()
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Carolin Bock: TU Darmstadt

No 30, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: Our study analyzes the effect of the capital gains tax on the individual investment decisions of venture capitalists. By doing so, we are able to study the decisions for a sample of 76,852 funding rounds in 32 countries from 2000 to 2012. Our results support the predictions of the theoretical model that higher capital gains tax rates are associated with fewer start-ups financed and a lower probability of receiving follow-up funding. However, the results concerning the effect on the probability of success of start-ups show that a higher tax burden is associated with a higher probability of eventual start-up success.

Keywords: Venture Capital; Capital Gains Tax; Selection Effect; Follow-up Funding; Innovation (search for similar items in EconPapers)
JEL-codes: G24 H25 H32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-acc, nep-ino, nep-pbe and nep-pub
Date: 2017-04-26
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https://rationality-and-competition.de/wp-content/ ... cussion_paper/30.pdf (application/pdf)

Related works:
Working Paper: The Capital Gains Tax: A Curse but also a Blessing for Venture Capital Investment (2017)
Working Paper: The Capital Gains Tax: A Curse but also a Blessing for Venture Capital Investment (2013)
Working Paper: The Capital Gains Tax: A Curse but also a Blessing for Venture Capital Investment (2012)
Working Paper: The Capital Gains Tax: A Curse but also a Blessing for Venture Capital Investment (2012)
Working Paper: The Capital Gains Tax: A Curse but also a Blessing for Venture Capital Investment (2011) Downloads
Working Paper: The capital gains tax: A curse but also a blessing for venture capital investment (2011) Downloads
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