How Does Human Capital Matter? Evidence from Venture Capital

Gu, Lifeng; Huang, Ruidi; Mao, Yifei; Tian, Xuan

doi:10.2139/ssrn.3060837

Cited by 1 publication

(1 citation statement)

References 44 publications

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“…However, Dey and White (2021) found that in response to IDD adoption, firms increased anti‐takeover provisions when human capital was important. Related to concerns about the flow of employees, Gu, Huang, Mao, and Tian (2020) found that venture capitalists (VCs) are more likely to invest in IDD adoption states in startups with higher human capital, especially when VC investment has higher uncertainty in returns and when monitoring costs are high.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Catch me if you can? Staggered inevitable disclosure doctrine (IDD) rejection and entrepreneurial activity in the US

Patel

Devaraj

2022

Strategic Entrepreneurship

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Research Summary Inevitable disclosure doctrine (IDD) refers to a legal doctrine where an employer can claim, without the need for proof or evidence, misappropriation of trade secrets to seek an injunction against an employee. Based on entrepreneurial spawning literature, for employees seeking to start their ventures, IDD rejection by state courts could therefore be a potential catalyst to entrepreneurial activity. In a sample of neighbor‐counties across state borders with and without IDD rejection, the two‐way fixed‐effects difference‐in‐differences estimates show positive effects for county‐level entrepreneurial outcomes. However, when applying more recently developed methods for testing staggered implementation, we find no support for county‐level entrepreneurial outcomes across multiple specifications and heterogeneities. The findings have implications for the limited efficacy of IDD rejection on regional entrepreneurial activity. Managerial Summary The value of protecting trade secrets is important for employers, and the role of laws in preventing employees from potentially disclosing their trade secrets is widely studied. One such legal doctrine is the inevitable disclosure doctrine (IDD) where an employer can claim, without the need for proof or evidence, misappropriation of trade secrets to seek an injunction against an employee. We find that IDD rejections by courts have a limited effect on the formation of startups in a county. The findings imply that investors are less encumbered by IDD rejections by courts and that policymakers may not find IDD rejections as a useful mechanism to prime local entrepreneurship.

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Section: Theoretical Backgroundmentioning

confidence: 99%