The Effect of Trade Secret Protection on Venture Capital Investments: Evidence From the Inevitable Disclosure Doctrine

Castellaneta F., Conti R., Kemeny C., Veloso F. (2016). The effect of trade secret protection on venture capital investments: Evidence from the inevitable disclosure doctrine. Journal of Business Venturing 31(5): 524-541

46 Pages Posted: 11 Jan 2019

See all articles by Francesco Castellaneta

Francesco Castellaneta

SKEMA Business School, Université Côte d'Azur (GREDEG)

Raffaele Conti

Bocconi University

Francisco M. Veloso

Carnegie Mellon University - Engineering and Public Policy (EPP); CATOLICA - LISBON School of Business and Economics

Carlos Kemeny

Carnegie Mellon University

Date Written: December 8, 2018

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.

Suggested Citation

Castellaneta, Francesco and Conti, Raffaele and Veloso, Francisco M. and Kemeny, Carlos, The Effect of Trade Secret Protection on Venture Capital Investments: Evidence From the Inevitable Disclosure Doctrine (December 8, 2018). Castellaneta F., Conti R., Kemeny C., Veloso F. (2016). The effect of trade secret protection on venture capital investments: Evidence from the inevitable disclosure doctrine. Journal of Business Venturing 31(5): 524-541, Available at SSRN: https://ssrn.com/abstract=3298038

Francesco Castellaneta (Contact Author)

SKEMA Business School, Université Côte d'Azur (GREDEG) ( email )

France

Raffaele Conti

Bocconi University ( email )

Via Sarfatti, 25
Milan, MI 20136
Italy

Francisco M. Veloso

Carnegie Mellon University - Engineering and Public Policy (EPP) ( email )

Pittsburgh, PA 15213
United States

HOME PAGE: http://www.andrew.cmu.edu/~fveloso/

CATOLICA - LISBON School of Business and Economics ( email )

Palma de Cima
Lisboa, 1649-023
Portugal

Carlos Kemeny

Carnegie Mellon University ( email )

Pittsburgh, PA 15213-3890
United States

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