| Abstract: |
We study the impact of legal reform of non-disclosure agreements (NDAs) on information flow in the workplace. We argue that limiting the use of NDAs in harassment cases reduces the harassment-related social frictions and enhances information exchange among employees. Using insider trading data to measure information flow, we show that the adoption of anti-NDA laws enhances insider trading profitability due to better trading decisions but reduces trading likelihood, suggesting faster and more extensive information diffusion that erodes the value of information. Additionally, we find that these laws increase firm value and management investment-Q sensitivity. We show that the effects of anti-NDA laws vary depending on the level of harassment-related frictions, the structure of social networks, and the characteristics of the firm's information environment.
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Biography:
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Yuping Jia is an Associate Professor at the Accounting Department of Frankfurt School of Finance and Management. Her main research interests focus on factors influencing financial reporting quality such as management characteristics, corporate governance elements, ownership structure etc. She applies both experimental and archival data research methods in her work.
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