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New US stock options rules will diminish economic growth, study claims

While venture capitalists retrenched, many of the companies they helped create have continued to expand during the past three years of economic turmoil. From 2001 to 2003, venture-backed companies created 600,000 jobs throughout the US, a net gain of 6.5 per cent, according to a study conducted by Global Insights on behalf of the National Venture Capital Association (NVCA).

The NVCA hopes to use this study's findings as a lobbying tool to persuade lawmakers that venture capital plants the seed for economic growth, in an attempt to block a plan that would require companies to deduct the cost of issuing employee stock options.

The organisation argues that the accounting change would make it more difficult for new companies to distribute stock options and would ultimately diminish growth by stifling the incentive to innovate.

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