Fiscal supporting policies for innovative projects in the early stages

Xiong Weiqin; Ding Qian

PDF(1141 KB)

Science Research Management ›› 2012 ›› Issue (6) : 24-30.

ARTICLES

Fiscal supporting policies for innovative projects in the early stages

Xiong Weiqin¹, Ding Qian²

Author information +

History +

Abstract

The fiscal financing policies for innovative projects in the early stages are studied under the framework of incentive theory. The main conclusions are as follows: (1) In order to attract venture capital’s entry, the entrepreneurs must invest enough private capital to guarantee their efforts input. Thereby, when innovators are constrained by wealth, the financial support from government could encourage more innovation. (2)For the onerous funding policy that public capital asks for a pro rata sharing of project benefits, Pareto is inferior to gratuitous funding policy, while public capital just asks for a fixed payment is neutral in incentives, and has almost same features as gratuitous funding policy. Based on these findings, an interpretation that venture capitalists have the stage preference when they are choosing investment projects is given. Furthermore, the contradictory nature of business angel is pointed out and it is proved that the role of public capital for supporting innovative projects in the early stages is irreplaceable.

Key words

innovation project / venture capital / fiscal support / private capital

Cite this article

EndNote

Ris (Procite)

Bibtex

Download Citations

Xiong Weiqin, Ding Qian. Fiscal supporting policies for innovative projects in the early stages[J]. Science Research Management. 2012(6): 24-30

References

[1] Boadway R., Tremblay J F. Public Economics and Start-up Entrepreneurship [M]// Kanniainen, V., Keuschnigg, C. (eds.), Venture Capital, Entrepreneurship and Public Policy, CESifo Seminar Series, Cambridge: MIT Press, 2005: 198-219.
[2] Da Rin M., Penas M F. The Effect of Venture Capital on Innovation Strategies, Working Paper, NBER, 2007.
[3] Amit R., Brander J., Zott C. Why do Venture Capital Firms Exist? Theory and Canadian Evidence [J]. Journal of Business Venturing, 1998, 13(6): 441-465.
[4] Leleux B., Surlemont B. Public Versus Private Venture Capital: Seeding Or Crowding Out? A Pan-European Analysis [J]. Journal of Business Venturing, 2003, 18(1): 81-104.
[5] Cumming D J., MacIntosh J G. Crowding Out Private Equity: Canadian Evidence [J]. Journal of Business Venturing, 2006, 21(3): 569-609.
[6] Lerner J. The Government as a Venture Capitalist: The Long-Run Effects of the SBIR Program [J]. Journal of Business, 1999, 72(3): 285-318.
[7] Djankov S., Ganser T., McLiesh C., Ramalho R., Shleifer A. The Effect of Corporate Taxes on Investment and Entrepreneurship. Working Paper, NBER, 2009.
[8] Cumming D. Agency Costs, Institutions, Learning, and Taxation in Venture Capital Contracting [J]. Journal of Business Venturing, 2005, 20(3): 573-622.
[9] Keuschnigg C., Nielsen S B. Public Policy for Venture Capital [J]. International Tax and Public Finance, 2001. 8(3): 557 572.
[10] Keuschnigg C., Nielsen S B. Tax Policy, Venture Capital, and Entrepreneurship [J]. Journal of Public Economics, 2003, 87(1): 175-203.
[11] Keuschnigg C., Nielsen S B. Start-ups, Venture Capitalists, and the Capital Gains Tax [J]. Journal of Public Economics, 2004a, 88(5): 1011-1042.
[12] Keuschnigg C. Public Policy, Venture Capital and Entrepreneurial Finance. Working Paper, University of St. Gallen, 2009.
[13] 李建华等.风险投资决策行为的理论研究与税收政策分析[J].中国管理科学, 2002, 10(1): 23-25.
[14] 乔桂明,卜亚.风险投资中委托代理问题与制度安排[J].科研管理, 2004,25(1): 118-122.
[15] 刘瑞翔,陈森发.公共政策与创业企业中的契约安排[J].系统管理学报, 2007, 16(6): 596-601.
[16] Leland H., Pyle D. Information Asymmetries, Financial Structure, and Financial Intermediation [J]. The Journal of Finance, 1977, 32(2): 371-387.
[17] Bhide A. Bootstrap Finance: the art of start-ups [J]. Harvard Business Review, 1992, 70(6): 109-117.
[18] Ibrahim D M. The (Not So) Puzzling Behavior of Angel Investors [J]. Vanderbilt Law Review, 2008, 61(5): 1405-1452.
[19] Price Waterhouse. Evaluation of the Small Business Administration’s 7 (a) Guaranteed Business Loan Program: Final Report. 1992.