Non-competes, career concerns, and debt covenants

• Main Authors: LOU, Yun, WANG, Rencheng, ZHOU, Yi
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2017
• Subjects: Non-Compete Clauses; Career Concerns; Debt Covenants; Accounting
• Online Access: https://ink.library.smu.edu.sg/soa_research/1854; https://ink.library.smu.edu.sg/context/soa_research/article/2881/viewcontent/SSRN_id3054876.pdf
• Institution: Singapore Management University

We study the impact of managers’ career concerns from non-competes enforcement on the design of debt covenants in private debt agreements. Using exogenous changes in the enforceability of managers’ non-compete clauses over the period of 1992-2004 across states in the United States, we show that borr...