Protection of proprietary information and forced CEO turnover: Evidence from a quasi-natural experiment

Speaker: Dr. Yupeng Lin (National University of Singapore)

Topic:	Protection of proprietary information and forced CEO turnover: Evidence from a quasi-natural experiment
Time&Date:	10:30 am-12:00 am, 2019/6/11 (Tuesday)
Venue:	Room 619, Teaching A
Speaker:	Dr. Yupeng Lin (National University of Singapore)
Abstract:	We examine whether the protection of proprietary information affects forced CEO turnover decisions. Using changes in the state-level enforceability of the covenant not to compete (CNC) as an exogenous shock to the protection level of a firm’s proprietary information, we find that strengthening CNC enforceability increases the likelihood of forced CEO turnover and enhances the sensitivity of forced CEO turnover to firm performance. Such effects are more pronounced when firms face more severe product market threats and operate in industries with greater potential threats of predatory hiring. Further analyses suggest that the increase in CNC enforceability reduces the likelihood of non-forced CEO turnover and implies a reduction in external CEO supply. As a result, a firm’s forced CEO turnover decision more likely responds to changes in CNC enforceability when an internal successor is available.