The University of Southampton
University of Southampton Institutional Repository

Taxation influences upon the market in venture capital trust stocks: theory and practice

Holland, Kevin and Jackson, Richard H.G. (2011) Taxation influences upon the market in venture capital trust stocks: theory and practice Accounting and Business Research, 41, (1), pp. 1-27. (doi:10.1080/00014788.2011.549633).

Record type: Article


Individuals investing in a Venture Capital Trust IPO listed on the London Stock Exchange receive a number of conditional tax incentives; the time related nature of the associated conditions can create a "lock in effect". By deriving and testing a model of the value of these incentives we examine how they influence investors' pricing and trading decisions. This paper contributes to the ongoing tax capitalisation debate in three ways: first, by calculating the magnitude of the lock-in effect without reference to underlying shareholder records; second, by adopting a time series approach in view of the time varying magnitude of the potential lock-in effect, and thereby avoiding control issues involved in cross-sectional analysis of the effects of taxation on pricing; and third, by focusing on changes in the bid-ask spread rather than, for example, mid price, so reducing the impact of changes in the market value of the instruments under consideration on the analysis. Our results have direct policy implications in suggesting a conflict between the existence of time related conditional tax incentives and the requirement for VCTs to be listed on the London Stock Exchange explicitly in order to promote liquidity in a historically illiquid sector of the market.

PDF VCT_ABR__e-prints.pdf - Author's Original
Download (510kB)

More information

Published date: 14 March 2011
Keywords: venture capital trust, taxation, relief, lock-in effect, listing
Organisations: Management


Local EPrints ID: 80380
ISSN: 0001-4788
PURE UUID: 4cd40e6b-495f-4897-9fe3-9b07a874468d

Catalogue record

Date deposited: 24 Mar 2010
Last modified: 18 Jul 2017 23:13

Export record



Author: Kevin Holland
Author: Richard H.G. Jackson

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton:

ePrints Soton supports OAI 2.0 with a base URL of

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.