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

Daniel Aobdia*

*Corresponding author for this work

Research output: Contribution to journalArticle

5 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)296-346
Number of pages51
JournalReview of Accounting Studies
Volume23
Issue number1
DOIs
StatePublished - Mar 1 2018

Keywords

  • Disclosure
  • Employee mobility
  • Noncompete agreements
  • Proprietary costs

ASJC Scopus subject areas

  • Accounting
  • Business, Management and Accounting(all)

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