Research

Professor Murillo Campello, University of Florida and NBER

"Tax Incentives and Venture Capital Risk-Taking: Evidence from the QSBS Program"

Wednesday 27 May 2026. 15:00-16:30 Room 588 The Adam Smith Business School Building

Abstract

Do tax subsidies prompt investors to take on risk? We address this question looking at investors’ re sponses to changes to the Qualified Small Business Stock (QSBS) program, which cut capital gains taxes on startup investing. We do so under a framework in which some startup investors—venture capitalists (VCs)—combine outside funding with incentive-based compensation, while others invest their own funds. Using bunching, regression discontinuity, triple-differences, and matching designs that exploit industry eligibility, investment vintage, and holding-period requirements, we analyze data from 158 thousand investor–firm pairings over two decades. We first identify strategic investment timing, with subsidies prompting clustering at tax-eligible holding-period thresholds. We then document strategic capital allocation, with firms just below eligibility thresholds receiving more funding than those just above. Most notably, when and where tax subsidies apply, VCs shift their project selection toward riskier ventures: they invest more in pre-commercial stage startups, become more likely to provide startups with their initial capital, and invest more in startups with pre-existing debt, while becoming less likely to co-syndicate their investments. Tax-subsidized VC-backed ven tures show higher failure rates. On the flip side, they attain higher valuations at exit and are more likely to reach “unicorn status.” None of these patterns are observed for comparable non-VC in vestors receivingthesametaxsubsidies. Ourtestsalsosuggestthattaxincentivesleadtoreallocation toward more innovative industries, yielding more impactful patents. Our study is the first to show that tax policy can shift entrepreneurial financing toward riskier, more innovative, valuable ventures.

Keywords: Tax Policy, Venture Capital, Risk-Taking, Entrepreneurial Financing, Innovation

Bio

Murillo Campello is an internationally recognized scholar of Financial Economics. His work has been widely published across all leading academic research outlets. Campello’s papers have been cited by prominent policy authorities, such as the Federal Reserve chairman, mentioned in Congressional hearings, described in the “Economic Report of the President,” and used to advise the U.S. Supreme Court. His work on the Financial Crisis, Brexit, and Covid-19, in particular, has been widely featured in the financial press (Financial Times, Reuters, The Wall Street Journal), books, and academic outlets.

Professor Campello is an Eminent Scholar in Finance at the University of Florida. He is the Managing Editor of The Journal of Financial Intermediation. He is also a Research Associate of the National Bureau of Economic Research, a Director of Research at the Judge Business School at the University of Cambridge, and a Distinguished Scholar at Pembroke College (Cambridge). Campello is the former Durland Chair Professor at the Johnson Graduate School of Management at Cornell University. He earned his PhD in Finance from the University of Illinois, an MS in Business Administration from the Pontifical Catholic University of Rio de Janeiro, and a BS in Economics from the Federal University of Rio de Janeiro.

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For further information, please contact business-school-research@glasgow.ac.uk

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First published: 16 April 2026