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The Benefits of Trade Secret Legal Protection: Evidence from Firms’ Cost Structure Decisions
The Journal of Law, Economics, and Organization ( IF 1.324 ) Pub Date : 2022-08-05 , DOI: 10.1093/jleo/ewac013
Feng Gao 1 , Xue Wang 2 , Benda Yin 3
Affiliation  

We investigate whether better trade secret legal protection permits a firm to shift resources from protecting trade secrets to expanding its fixed operation capacity, thus reducing cost elasticity. We employ the staggered adoption of the Inevitable Disclosure Doctrine (IDD) by US state courts as a plausibly exogenous shock that improves trade secret legal protection. We find a reduction, on average, in cost elasticity in firms headquartered in the IDD recognition states relative to those in non-affected states. This change in cost structure is concentrated in firms with trade secrets. These results highlight that the optimal choice of fixed resources is affected by the extent of trade secret protection. Further, we find that firm value is higher for trade secret firms after the IDD adoption. Overall, our empirical evidence suggests that trade secret legal protection is beneficial for firms with trade secrets.

中文翻译:

商业秘密法律保护的好处:来自公司成本结构决策的证据

我们调查了更好的商业秘密法律保护是否允许公司将资源从保护商业秘密转移到扩大其固定运营能力,从而降低成本弹性。我们利用美国州法院对不可避免披露原则 (IDD) 的交错采用作为一种看似合理的外生冲击,从而改善了商业秘密的法律保护。我们发现,与未受影响州相比,总部位于 IDD 识别州的公司的成本弹性平均降低。这种成本结构的变化主要集中在拥有商业秘密的公司中。这些结果表明,固定资源的最优选择受商业秘密保护程度的影响。此外,我们发现在采用 IDD 后,商业秘密公司的公司价值更高。全面的,
更新日期:2022-08-05
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