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

52 Pages Posted: 13 Sep 2023

See all articles by Daniel Ferrés

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

Date Written: August 25, 2023

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.

Keywords: Monopsony, Anti-Poaching Agreements, Human Capital, Innovation, Technology Industry

JEL Classification: G31, J21, J23, J24, J33, J42

Suggested Citation

Ferrés, Daniel and Kankanhalli, Gaurav and Muthukrishnan, Pradeep, Anti-Poaching Agreements, Innovation, and Corporate Value: Evidence from the Technology Industry (August 25, 2023). Available at SSRN: https://ssrn.com/abstract=4552393 or http://dx.doi.org/10.2139/ssrn.4552393

Daniel Ferrés

Universidad de Montevideo ( email )

Puntas de Santiago 1604
Montevideo, Montevideo 11500
Uruguay

Gaurav Kankanhalli

University of Pittsburgh - Katz Graduate School of Business ( email )

Pittsburgh, PA 15260
United States

Pradeep Muthukrishnan (Contact Author)

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

7 McAlister Drive
New Orleans, LA
United States

HOME PAGE: http://www.pradeepmuthukrishnan.com

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