Azevedo, Alcino, Pereira, Paulo J. and Rodrigues, Artur (2018). Non-compete covenants, litigation and garden leaves. Journal of Business Research, 88 , pp. 197-211.
Abstract
We develop a dynamic model which assesses non-compete covenants (NCC) and garden leaves (GL) and examine the effect of the uncertainty, embargo period and severance payment on the manager's behavior and the reimbursement amount that is due to the firm if there is a violation of the NCC. We find that if the firm wants to deter the manager from leaving, the NCC is more effective than the GL when the industry uncertainty is low, or the embargo period is long, or the salary of the manager now or when working outside the industry is low, or the salary of the manager when working for the competitor or the gain of the competitor due to the arrival of the manager is high. Otherwise, the GL is more advisable. However, contrary to the usual higher tolerance about GL, our results show that, overall, NCC are less harmful than GL.
Publication DOI: | https://doi.org/10.1016/j.jbusres.2018.03.020 |
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Divisions: | College of Business and Social Sciences > Aston Business School College of Business and Social Sciences > Aston Business School > Economics, Finance & Entrepreneurship |
Additional Information: | © 2018, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International http://creativecommons.org/licenses/by-nc-nd/4.0/ |
Publication ISSN: | 1873-7978 |
Last Modified: | 08 Oct 2024 07:17 |
Date Deposited: | 04 Apr 2018 13:27 |
Full Text Link: | |
Related URLs: |
https://www.sci ... 148296318301486
(Publisher URL) |
PURE Output Type: | Article |
Published Date: | 2018-07 |
Published Online Date: | 2018-03-30 |
Accepted Date: | 2018-03-17 |
Authors: |
Azevedo, Alcino
(
0000-0002-4751-6085)
Pereira, Paulo J. Rodrigues, Artur |
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