Non-Compete Agreements and the Value of Intangible Assets
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Han-yxhan-phd-Management-2026-thesis.pdf
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Author(s)
Han, Yuxin (Zoe)
Advisor(s)
Core, John E.
Weber, Joseph P.
Date Issued
May 2026
Publisher
Massachusetts Institute of Technology
Abstract
This paper examines how non-compete agreements (NCAs) affect intangible asset value. Using state-level legal changes in a stacked difference-in-differences design, I find that stronger NCA enforceability reduces M&A deal premiums for target firms in affected states. These firms are also more likely to impair acquired intangible assets and record larger impairment charges. Following strengthened enforceability, firms with higher prior investments in intangible assets experience negative market reactions. The evidence suggests that stronger NCA enforceability has a net negative effect: while NCAs enhance employee retention, they also increase external hiring constraints imposed by other firms’ NCAs and exacerbate agency costs. The reduction in deal premiums is more pronounced for firms in industries with prevalent NCA disclosures but is attenuated in industries with high employee retention benefits. These findings suggest that internal retention advantages partially offset the costs associated with external labor market frictions and agency concerns. Overall, this study provides new evidence that stricter labor mobility constraints reduce intangible asset value.
MIT Department
Sloan School of Management
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