The effect of trade secret legal protection on venture capital investments: evidence from the inevitable disclosure doctrine

Francesco Castellaneta*, Raffaele Conti, Francisco M. Veloso, Carlos A. Kemeny

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

This study investigates how the inevitable disclosure doctrine, a form of trade secret legal protection, affects venture capital (VC) investment. Using a data set of VC deals realized in the United States from 1980 to 2012, we find that a rule in favor of inevitable disclosure increases the amount of VC investment. We address mechanisms that can explain these findings by assessing how the inevitable disclosure doctrine (a) displays a different impact on VC investments according to the characteristics of the state and the industry where the start-ups operate and (b) affects the performance of VC-backed firms. We also discuss managerial and policy implications of our findings.
Original languageEnglish
Pages (from-to)524-541
Number of pages18
JournalJournal of Business Venturing
Volume31
Issue number5
DOIs
Publication statusPublished - 1 Sep 2016

Keywords

  • Inevitable disclosure doctrine
  • Intellectual property rights protection
  • Legal environment
  • Trade secrets
  • Venture capital

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