Details
| Originalsprache | Englisch |
|---|---|
| Seiten (von - bis) | 549-571 |
| Seitenumfang | 23 |
| Fachzeitschrift | Journal of financial economics |
| Jahrgang | 138 |
| Ausgabenummer | 2 |
| Frühes Online-Datum | 20 Juni 2020 |
| Publikationsstatus | Veröffentlicht - Nov. 2020 |
| Extern publiziert | Ja |
Abstract
We examine how capital gains taxes affect investment in private start-up (i.e., pre-IPO) firms. Using data on capital raised in individual funding rounds, we estimate the effect of the 2010 SBJA, which implemented a full exemption from federal capital gains tax on the sale of qualified shares. Because of the resulting higher expected after-tax returns, we hypothesize and find evidence consistent with this capital gains tax reduction increasing the amount of investment in start-up firms per funding round by about 12%. The effect is stronger in start-up firms that are likely to have greater administrative capacity. We estimate that about one-third of the tax benefit is captured by investors.
ASJC Scopus Sachgebiete
- Betriebswirtschaft, Management und Rechnungswesen (insg.)
- Bilanzierung
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Finanzwesen
- Volkswirtschaftslehre, Ökonometrie und Finanzen (insg.)
- Volkswirtschaftslehre und Ökonometrie
- Betriebswirtschaft, Management und Rechnungswesen (insg.)
- Strategie und Management
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in: Journal of financial economics, Jahrgang 138, Nr. 2, 11.2020, S. 549-571.
Publikation: Beitrag in Fachzeitschrift › Artikel › Forschung › Peer-Review
}
TY - JOUR
T1 - Capital gains taxation and funding for start-ups
AU - Edwards, Alexander
AU - Todtenhaupt, Maximilian
PY - 2020/11
Y1 - 2020/11
N2 - We examine how capital gains taxes affect investment in private start-up (i.e., pre-IPO) firms. Using data on capital raised in individual funding rounds, we estimate the effect of the 2010 SBJA, which implemented a full exemption from federal capital gains tax on the sale of qualified shares. Because of the resulting higher expected after-tax returns, we hypothesize and find evidence consistent with this capital gains tax reduction increasing the amount of investment in start-up firms per funding round by about 12%. The effect is stronger in start-up firms that are likely to have greater administrative capacity. We estimate that about one-third of the tax benefit is captured by investors.
AB - We examine how capital gains taxes affect investment in private start-up (i.e., pre-IPO) firms. Using data on capital raised in individual funding rounds, we estimate the effect of the 2010 SBJA, which implemented a full exemption from federal capital gains tax on the sale of qualified shares. Because of the resulting higher expected after-tax returns, we hypothesize and find evidence consistent with this capital gains tax reduction increasing the amount of investment in start-up firms per funding round by about 12%. The effect is stronger in start-up firms that are likely to have greater administrative capacity. We estimate that about one-third of the tax benefit is captured by investors.
KW - Capital gains taxes
KW - Start-ups
KW - Tax capitalization
UR - http://www.scopus.com/inward/record.url?scp=85087216282&partnerID=8YFLogxK
U2 - 10.1016/j.jfineco.2020.06.009
DO - 10.1016/j.jfineco.2020.06.009
M3 - Article
AN - SCOPUS:85087216282
VL - 138
SP - 549
EP - 571
JO - Journal of financial economics
JF - Journal of financial economics
SN - 0304-405X
IS - 2
ER -