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Public policy and the creation of active venture capital markets Author info | Abstract | Publisher info | Download info | Related research | Statistics Marco Da Rin () (Department of Economics and Finance, Turin University, Italy )
Giovanna Nicodano () (Department of Economics and Finance, Turin University, Italy )
Alessandro Sembenelli () (Department of Economics and Finance, Turin University, Italy )
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We study how public policy can contribute to increase the share of early stage and high-tech venture capital investments, thus helping the development of active venture capital markets. A simple extension of the seminal model by Holmstrom and Tirole (1997) provides a theoretical base for our analysis. We then explore a unique panel of data for 14 European countries between 1988 and 2001. We have several novel findings. First, the opening of stock markets targeted at entrepreneurial companies positively affects the shares of early stage and high-tech venture capital investments; reductions in capital gains tax rates have a similar, albeit weaker, effect. Second, a reduction in labor regulation creases the share of high-tech investments. Finally, we find no evidence of a shortage of supply of venture capital funds, and no evidence of an effect of increased public R&D spending on the share of high-tech or early stage venture capital investments.
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Paper provided by European Central Bank in its series Working Paper Series with number
430.
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Length: 44 pages
Date of creation: Jan 2005Date of revision:
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Keywords: Venture Capital Capital Gains Tax Public R&D Expenditure Barriers to Entrepreneurship Stock Markets Public Policy Other versions of this item:
Find related papers by JEL classification: G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data) G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General O30 - Economic Development, Technological Change, and Growth - - Technological Change - - - General
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
Christian Keuschnigg & Soren Bo Nielsen, 2006.
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283, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
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