What shapes CSR performance? Evidence from the changing enforceability of non-compete agreements in the United States

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

1 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)334-359
Journal / PublicationReview of Financial Economics
Volume39
Issue number3
Online published26 Jul 2021
Publication statusPublished - Jul 2021

Abstract

Using a unique setting of exogenous variations in non-compete agreement (NCA) enforceability in the United States, we investigate whether companies strategically engage in corporate social responsibility (CSR) practices to retain employees. Using a difference-in-differences design, we find that an increase in the enforceability of NCAs deteriorates CSR performance. Cross-sectional tests indicate that peer pressure affects CSR performance interactively with enforceability of NCAs. These findings demonstrate the unintended consequences of regulation and are consistent with the notion that firms strategically engage in CSR practices to retain employees, thereby reducing knowledge spillover associated with employee mobility.

Research Area(s)

  • CSR performance, enforceability, non- compete agreements

Bibliographic Note

Research Unit(s) information for this publication is provided by the author(s) concerned.