Taxation of a Venture Capitalist With a Portfolio of Firms
Journal
Oxford Economic Papers
ISSN
0030-7653
ISSN-Digital
1464-3812
Type
journal article
Date Issued
2004-04-01
Author(s)
Abstract
Venture capitalists not only finance but also advise and thereby add value to young entrepreneurial firms. The prospects of venture capital backed firms thus depend on joint efforts of entrepreneurs and informed venture capitalists, and are subject to double moral hazard. For this reason, managerial support and the number of portfolio companies tend to be inefficiently low. This paper investigates how tax policy can possibly contribute to a more active style of venture capital investments. An optimal tax policy is derived that moves the private equilibrium towards a first best allocation.
Language
English
Keywords
Venture capital
taxation
double moral hazard.
HSG Classification
not classified
Refereed
No
Publisher
Oxford Univ. Press
Publisher place
Oxford
Volume
56
Number
2
Start page
285
End page
306
Pages
22
Subject(s)
Eprints ID
2110
File(s)![Thumbnail Image]()
Name
IFFDP0202.pdf
Size
179.45 KB
Format
Adobe PDF
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