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

Listed author(s):
  • Achleitner, A.-K.
  • Bock, Carolin
  • Watzinger, M.

This article documents a statistical association between the number and success of venture capital investments and the capital gains tax rate. To do this, we analyze investment data and taxes of 32 countries from 2000 to 2010. In our data, higher capital gains tax rates are associated with fewer firms financed and a lower probability for ventures receiving follow-up funding. However, if the first investment is received when taxes are high, the probability of a firm eventually going public or being acquired increases. We conclude that high tax rates are associated with fewer, but on average more successful companies.

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Paper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL) in its series Publications of Darmstadt Technical University, Institute for Business Studies (BWL) with number 77328.

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Date of creation: 2012
Handle: RePEc:dar:wpaper:77328
Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/77328/
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