The effect of trade secret legal protection on venture capital investments: Evidence from the inevitable disclosure doctrine

Francesco Castellaneta (), Raffaele Conti, Francisco M. Veloso and Carlos A. Kemeny

Journal of Business Venturing, 2016, vol. 31, issue 5, 524-541

Abstract: This study investigates how the inevitable disclosure doctrine, a form of trade secret legal protection, affects venture capital (VC) investment. Using a data set of VC deals realized in the United States from 1980 to 2012, we find that a rule in favor of inevitable disclosure increases the amount of VC investment. We address mechanisms that can explain these findings by assessing how the inevitable disclosure doctrine (a) displays a different impact on VC investments according to the characteristics of the state and the industry where the start-ups operate and (b) affects the performance of VC-backed firms. We also discuss managerial and policy implications of our findings.

Keywords: Intellectual property rights protection; Trade secrets; Inevitable disclosure doctrine; Venture capital; Legal environment (search for similar items in EconPapers)
JEL-codes: L26 O34 O43 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbvent:v:31:y:2016:i:5:p:524-541

DOI: 10.1016/j.jbusvent.2016.07.004

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