Sensitivity of the suply of private equity to changes in the regulatory environment

This work analyses the efficacy of two regulatory changes on private equity fundraising. In particular. the efficacy of changes in the capital gains tax and the introduction of a new legislation regulating private equity activity are analysed. Considering the population of private equity institutions in Spain during the period 1991-2007. the results show the effectiveness of the introduction of specific regulation intended to limit double taxation and provide confidence to investors. On the contrary. no firm evidence is found about the effect of a reduction of the tax in capital gains at the personal income tax. maybe due to the indirect relationship with the demand for private equity. These results are important to the regulator since they show the effectiveness of several measures aimed It contributing to the development of private equity markets.