Monday, December 4, 2023

Anti-Poaching Agreements, Innovation, and Corporate Value: Evidence from the Technology Industry

Anti-Poaching Agreements, Innovation, and Corporate Value: Evidence from the Technology Industry

Daniel Ferrés

Universidad de Montevideo

Gaurav Kankanhalli

University of Pittsburgh - Katz Graduate School of Business

Pradeep Muthukrishnan

Tulane University, A.B. Freeman School of Business, Department of Finance

Abstract

The U.S. Department of Justice initiated antitrust action in 2010 against major Silicon Valley technology firms engaging in anti-poaching agreements. Under labor market collusion, cartel firms experienced lower inventor departure rates relative to comparable non-cartel firms. Accordingly, cartel firms produced superior innovation output over the collusive period, particularly in technology areas covered by the agreements, while their dissolution was accompanied by a reversal of this trend. Event-study tests around the unanticipated antitrust action show a negative returns response. Our results reveal important linkages between reduced employee turnover arising from firms' anti-competitive conduct in labor markets and their innovation and valuations.

https://lawprofessors.typepad.com/antitrustprof_blog/2023/12/anti-poaching-agreements-innovation-and-corporate-value-evidence-from-the-technology-industry.html

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