Double Moral Hazard, Public Policy And The Financing Of High-tech SEMs

The financing problem of High–tech SMEs has been existing for a long time. The VC for the High–tech SMEs is of great significance, because VCs may provide funding on the one hand, on the other hand they can provide value-added services and supervision. However, influenced by the asymmetric information and externalities, VC is insufficient, and much of the VC enters into the High –tech SMEs’ growth and maturity period, rather than the start-up period. In view of the market failure of financing about High–tech SMEs, the Government has actively taken many measures to conduct necessary interventions, such as taxes and subsidies. Based on the double moral hazard problem of both Entrepreneur and VCs, this paper builds a theoretical model to analyze the availability of finance about the High–tech SMEs in the enterprise level. Further, the subsidies and tax policies are added in, and under the reference standards of social welfare maximization, this paper analyses the optimal combination of public policy. The main conclusions of this paper are:(1) The availability of mixed financing(the meanwhile financing to ordinary investors and VCs) is relatively high. The capital gains tax reduces the availability of mixed financing, but the subsidy to output can increase the availability;(2) Standing in the perspective of social welfare, subsidy to output as the representative of post-subsidy compared to the effect of pre-investment subsidies represented by the subsidy is better;(3) under the condition of social welfare maximization, without taking into account the tax constraints, the optimal combination of public policy is: capital gains tax is 0, the output of a subsidy is determined by a plurality of parametric. Considering the tax constraints, the optimal combination of public policy is determined by the tax constraint Q-R??? ?. Given different values of ?, the optimal combination of public policy is different.