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Mobility Restrictions and Risk-related Agency Conflicts

  • Series
    Erasmus Finance Seminars
  • Speaker(s)
    Ron Masulis (UNSW, Australia)
  • Field
    Finance, Finance
  • Location
  • Date and time

    November 10, 2020
    09:00 - 10:15

Abstract: Stricter enforcement of post-employment restrictions that strengthens trade secrets protection also limits CEOs’ alternative employment opportunities. We find that such mobility restrictions, which heightened CEO career concerns can dampen their risk-taking incentives and distort corporate financing decisions, particularly in firms whose CEOs value outside employment opportunities relatively highly. Stock market reactions to acquisition announcements suggest that intensified CEO career concerns from mobility restrictions compromise the quality of investment decisions. More generally, managerial career concerns adversely affect shareholder value by exacerbating risk-related agency conflicts. Thus, our evidence suggests that shareholders can benefit from more unconstrained labor markets that promote managerial risk-taking.

Link to the seminar:

Meeting ID: 953 2138 2013

Passcode: please send an email to stolting@ese.eur.nl for the passcode

Some information and suggestions:

  • To improve the seminar atmosphere, we strongly encourage you to switch on your webcam.
  • Your microphone will be on mute upon joining the meeting, please leave it like that and unmute it only if you want to ask a question.
  • Asking questions: please go ahead and ask questions in the “usual way” (i.e., don’t use the chat unless you want to notify me/host of any problem related to the seminar).