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on Entrepreneurship |
| By: | Christopher Teh (Toulouse School of Economics, 31000 Toulouse, France & School of Economics,); Chengsi Wang (Department of Economics and Monash Digital Lab, Monash University) |
| Abstract: | This article critically examines recent economic theories on the relationship between startup acquisitions and innovation. We argue that the prevalence of killer acquisitions is likely overstated, even from a purely theoretical perspective. We further show that the entry-for-buyout effect may not always hold: relaxing merger control does not necessarily lead startups to invest more or pursue more disruptive innovation. Effective merger policy must adopt a dynamic perspective, balancing short-term competitive harms against long-terminnovation benefits. The article concludes with practical policy recommendations for the design and enforcement of merger control. |
| Keywords: | acquisition, innovation, merger policy, startup |
| JEL: | G34 L12 L41 O3 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:mos:moswps:2025-15 |
| By: | Eduardo Azevedo; Florian Scheuer; Kent Smetters; Min Yang |
| Abstract: | Recent proposals to tax unrealized capital gains or wealth have sparked a debate about their impact on entrepreneurship. We show that accrual-based taxation creates two opposing effects: successful founders face greater dilution from advance tax payments, whereas unsuccessful founders receive tax credits that effectively provide insurance. Using comprehensive new data on U.S. venture capital deals, we find that founder returns remain extremely skewed, with 84% receiving zero exit value while the top 2% capture 80% of total value. Moving from current realization-based to accrual-based taxation would reduce founder ownership at exit by 25% on average but would also increase the fraction receiving positive payoffs from 16% to 47% when tax credits are refunded. Embedding these distributions in a dynamic career choice model, we find that founders with no or moderate risk aversion prefer the current realization-based tax system, while more risk-averse founders prefer accrual-based taxation. We estimate that a 2% annual wealth tax has a similar impact on dilution as taxing unrealized capital gains, but produces no risk-sharing benefits due to the absence of tax credits in case of down rounds. |
| Keywords: | capital gains tax, wealth tax, venture capital, entrepreneurship, dilution |
| JEL: | G3 H2 J3 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12275 |
| By: | Zainab Iftikhar; Anna Zaharieva |
| Abstract: | This paper evaluates the effects of low-skill immigration on small businesses, wages, and employment in Germany. We develop a search and matching model with heterogeneous workers, cross-skill matching, and endogenous entry into entrepreneurship. The model is calibrated using data from the German SocioEconomic Panel (SOEP). Quantitative analysis shows that low-skill immigration increases the welfare of high-skill workers. It also leads to the endogenous expansion of immigrant entrepreneurial activities, generating positive spillovers for all demographic groups except native entrepreneurs. However, the gains are outweighed by the losses in welfare of low-skill workers, and overall, there is a marginal loss of per-worker welfare to the economy. Policies restricting immigrant entrepreneurship relax competition for native small businesses but reduce welfare for all other worker groups. |
| Keywords: | entrepreneurship, small business, self-employment, search frictions, immigration |
| JEL: | J23 J31 J61 J64 L26 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_714 |
| By: | Masayuki MORIKAWA |
| Abstract: | This study presents evidence on the performance of firms up to FY2023 that used three major support policies during the COVID-19 crisis: financial assistance, the employment assistance subsidy, and the subsidy to sustain business. The results show, first, that although productivity among firms that received support improved compared to levels immediately following the crisis, it generally remained low even after the pandemic subsided, with the quantitative magnitude differing across policy measures. Second, profit margins and mean wages of firms that received financial assistance or the subsidy to sustain business returned to their pre-COVID-19 levels, while wages of firms that used the employment assistance subsidy remained low as of FY2023. Third, by FY2023, employment levels declined among firms that used the support measures, compared to those that did not. Fourth, the probability of survival in FY2023 was lower for firms that used the support measures, suggesting that the effectiveness of these policies was limited. However, the support measures did not appear to hinder the market’s selection mechanism, whereby less productive firms exit from the market. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25107 |
| By: | Joseph Staudt |
| Abstract: | I use administrative data from universities (UMETRICS) linked to the universe of confidential W-2 and 1040-C tax records to measure faculty commercial engagement and its role in female-male earnings gaps. Female faculty are 20 percentage points less likely to engage commercially, with the entire gap driven by self-employment. The raw earnings gap is $63, 000 on a base of $162, 000 and non-university earnings account for $18, 000 (29 percent) of this total. Thus, while university pay explains most of the gap, commercial engagement substantially amplifies it. Earnings gaps appear in all components of non-university pay – self-employment, and work for incumbent, young/startup, high-tech, and non-high-tech firms – and remain large, though attenuated, after controlling publications, patents, field, university, scientific resources, age, marital status, childbearing, and demographics. Gaps widen as faculty move up the earnings distribution, and commercial engagement becomes a larger contributor. Men and women engage with similar industries, but men earn more in all shared industries. |
| Keywords: | entrepreneurship, academic commercial engagement, male-female wage gap, university faculty |
| JEL: | O30 J16 J31 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-68 |
| By: | Ali-Yrkkö, Jyrki; Pajarinen, Mika; Rouvinen, Petri; Ylhäinen, Ilkka |
| Abstract: | Abstract Growth in employment and productivity is concentrated in private equity-backed business groups and, to a lesser degree, in foreign-owned ones. No corresponding impact is observed for domestic ownership. Given that both private equity and foreign ownership are relatively uncommon, it is crucial to account for selection effects – that is, whether these investors are simply adept at picking superior targets. Nevertheless, our analysis indicates that these ownership changes themselves cause growth. This points to the role of active and engaged ownership, driven by exceptionally skilled individuals with strong financial incentives to pursue growth. When developing Finland’s business finance ecosystem, greater emphasis should be placed on the quality of ownership, not merely on capital availability or the number of owners. In light of these findings, policies that incentivize business angels and private equity investors, as well as those that foster the accumulation of private wealth and its channeling into high-growth enterprises, appear prudent. |
| Keywords: | Firm growth, Corporate finance, Equity finance, Ownership structure, Private equity |
| JEL: | G24 G32 G34 L25 |
| Date: | 2025–11–10 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:168 |