Protection of trade secrets and capital structure decisions

Sandy J Klasa; Hernán Ortiz-Molina; Matthew Serfling; Shweta Srinivasan

doi:10.1016/j.jfineco.2018.02.008

Protection of trade secrets and capital structure decisions

Sandy J Klasa, Hernán Ortiz-Molina, Matthew Serfling, Shweta Srinivasan

Finance

Research output: Contribution to journal › Article › peer-review

25 Scopus citations

Abstract

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.

Original language	English (US)
Journal	Journal of Financial Economics
DOIs	https://doi.org/10.1016/j.jfineco.2018.02.008
State	Accepted/In press - Jan 1 2018

Keywords

Capital structure
Competitive threats
Intellectual property
Trade secrets

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics
Strategy and Management

Access to Document

10.1016/j.jfineco.2018.02.008

Fingerprint Dive into the research topics of 'Protection of trade secrets and capital structure decisions'. Together they form a unique fingerprint.

Cite this

@article{35601c1cbcb743b2afcc03aefabae1f5,

title = "Protection of trade secrets and capital structure decisions",

abstract = "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.",

keywords = "Capital structure, Competitive threats, Intellectual property, Trade secrets",

author = "Klasa, {Sandy J} and Hern{\'a}n Ortiz-Molina and Matthew Serfling and Shweta Srinivasan",

year = "2018",

month = jan,

day = "1",

doi = "10.1016/j.jfineco.2018.02.008",

language = "English (US)",

journal = "Journal of Financial Economics",

issn = "0304-405X",

publisher = "Elsevier",

}

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

UR - http://www.scopus.com/inward/citedby.url?scp=85042860142&partnerID=8YFLogxK

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 -