Enforcement of Non‐Compete Agreements, Outside Employment Opportunities, and Insider Trading*
研究发现，总部位于严格执行竞业禁止协议的州的上市公司，其高管和董事通过内幕交易获得的利润更低，且更少利用信息优势在不利财报公布前卖出股票。
ABSTRACT Enforcement of non‐compete agreements could affect executives' and directors' incentives to profit from their information advantage. This is because excessive trading profits could result in job termination, which would trigger the restrictions imposed by the non‐compete agreements. We find that executives' and directors' insider trading profits from sales are lower for companies headquartered in states with greater enforcement of non‐compete agreements. The path analyses suggest that high enforcement of non‐compete agreements disincentivizes managers to profit from their information advantage to avoid the possibility of job termination and the cost of job terminations. We also find that insiders in companies headquartered in states with greater enforcement of non‐compete agreements are less likely to exploit their information advantage by timing their sales before unfavorable corporate earnings announcements. The results suggest that enforcement of non‐compete agreements reduces executives' and directors' incentives by imposing costs on future outside employment opportunities.