Taxation of a Venture Capitalist with a Portfolio of Firms

By C. Keuschnigg. Social Science Research Network, 2004

136 citations recorded by the source corpus.

Venture capitalists not only finance but also advise and thereby add value to young innovative 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. In financing a portfolio of firms, venture capitalists additionally face a trade-off between the number of companies and the amount of managerial advice allocated to each individual venture. The paper argues that managerial support and the number of portfolio firms are inefficiently low in private equilibrium. An optimal tax policy is derived that succeeds to move the private equilibrium towards a first best allocation.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/adf8a106dddc5a73dc6fd48b615e668840e8440d

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Citations in the corpus

Adverse Selection and Capital Structure: Evidence from Venture Capital (2006, unknown): “In Tables 6 and 7 we did not consider that variable as endogenous since capital requirements to start a project are typically taken as exogenous in theoretical (e.g., Kanniainen and Keuschnigg, 2003, 2004; Keuschnigg, 2003) and empirical work (e.”
Information asymmetries, agency costs and venture capital exit outcomes (2008, unknown): “…of contacts for investee firms with suppliers, accountants, lawyers and investment banks (Gompers and Lerner 1999; Bascha and Walz 2001; Bergmann and Hege 1998; Wright and Lockett 2003; Kanniainen and Keuschnigg 2003, 2004; Megginson 2004; Neus and Walz 2005; Mayer, Schoors, and Yafeh 2005).”
Venture Capital Backed Growth (2004, unknown): “With convex cost, Kanniainen and Keuschnigg (2003) derive an optimal number of portfolio companies per VC.”
Government, Venture Capital and the Growth of European High-Tech Entrepreneurial Firms (2014, background): “, Jeng and Wells, 2000) to tax incentives (e.g., Keuschnigg and Nielsen, 2002; Keuschnigg, 2004).”
Public Policy and the Creation of Active Venture Capital Markets (2006, background): “[51] Keuschnigg, Christian (2004) ’Taxation of a Venture Capitalist with a Portfolio of Firms,’ Oxford Economic Papers 56 (1), 285—306.”
The impact of venture capital on innovation behaviour and firm growth (2010, unknown): “Given such a situation, venture capital management funds take advantage of their role as specialized finance intermediaries (Gompers and Lerner 1999, 2001; Kanniainen and Keuschnigg 2004; Keuschnigg and Nielsen 2004).”