Les initiatives québécoises dans le domaine de la capitalisation des entreprises: Le point de vue des investisseurs

Starting in 1976, the Quebec provincial government has introduced several programs and organisations with the objective of raising equity capital for companies; the Societes de developpement de l'entreprise quebecoise (SODEQ) were followed by the availability of the 'developing company' category under the QSSP and then by the Fonds de Solidarite ( FTQ). These programs were instigated in an attempt to diminish the 'small business under-capitalisation problem'. To attain this and encourage Quebec residents to invest more in equity securities, the government chose tax incentives. Nevertheless, unlike most tax incentive programs, these were not neutral; by changing the risk-return relationship of securities, the government provoked a redistribution of the savings of Quebec investors. In this study, we evaluate the effect of this redistribution on the wealth of investors and demonstrate that these investments had a very low return, even if the resulting deductions and credits are considered. In fact, the total cost of these programs for investors adds up to $200 millions.