Employee mobility, noncompete agreements, product-market competition, and company disclosure

Daniel Aobdia ()
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Daniel Aobdia: Northwestern University

Review of Accounting Studies, 2018, vol. 23, issue 1, No 9, 296-346

Abstract: Abstract This study explores the impact on companies’ disclosures of U.S. states’ different propensities to enforce noncompete agreements. I find a negative association between a state’s enforcement of noncompete agreements and disclosure activities of firms headquartered in that state. Companies that face local rivals drive some results. Analyses that focus on several state-level changes in enforcement level of noncompete agreements confirm this association. Overall, the findings are consistent with a higher enforcement of noncompete agreements increasing proprietary costs of disclosure, because companies in high-enforcement settings are less informed about each other due to reduced information leakage from employee transfers across competitors. The results suggest that the overall environment for information spillovers surrounding a firm impacts its degree of disclosure to the capital markets and that state-specific enforcement of noncompete agreements can be used as a novel measure of the proprietary costs of disclosure.

Keywords: Employee mobility; Disclosure; Noncompete agreements; Proprietary costs (search for similar items in EconPapers)
JEL-codes: J62 K31 M41 M55 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s11142-017-9425-z

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