TY - JOUR
T1 - Protection of trade secrets and capital structure decisions
AU - Klasa, Sandy J
AU - Ortiz-Molina, Hernán
AU - Serfling, Matthew
AU - Srinivasan, Shweta
PY - 2018/1/1
Y1 - 2018/1/1
N2 - Firms strategically choose more conservative capital structures when they face greater competitive threats stemming from the potential loss of their trade secrets to rivals. Following the recognition of the Inevitable Disclosure Doctrine by US state courts, which exogenously increases the protection of a firm's trade secrets by reducing the mobility of its workers who know its secrets to rivals, the firm increases its leverage relative to unaffected rivals. The effect is stronger for firms with a greater risk of losing key employees to rivals, for those facing financially stronger rivals, and for those in industries where competition is more intense.
AB - Firms strategically choose more conservative capital structures when they face greater competitive threats stemming from the potential loss of their trade secrets to rivals. Following the recognition of the Inevitable Disclosure Doctrine by US state courts, which exogenously increases the protection of a firm's trade secrets by reducing the mobility of its workers who know its secrets to rivals, the firm increases its leverage relative to unaffected rivals. The effect is stronger for firms with a greater risk of losing key employees to rivals, for those facing financially stronger rivals, and for those in industries where competition is more intense.
KW - Capital structure
KW - Competitive threats
KW - Intellectual property
KW - Trade secrets
UR - http://www.scopus.com/inward/record.url?scp=85042860142&partnerID=8YFLogxK
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U2 - 10.1016/j.jfineco.2018.02.008
DO - 10.1016/j.jfineco.2018.02.008
M3 - Article
AN - SCOPUS:85042860142
JO - Journal of Financial Economics
JF - Journal of Financial Economics
SN - 0304-405X
ER -