The crash consequences of inalienable human capital
Year: 2026
Type: article
Abstract: Purpose Human capital has an inalienable nature, and the departure of key talents could make a firm's capital less profitable. Design/methodology/approach Our test exploits USA state courts’ staggered rejections of the inevitable disclosure doctrine (IDD), which improves the ability of key talent to switch jobs. Findings In a difference-in-differences setting, we find that relative to unaffected firms, firms experience a significantly increased stock price crash risk after the states where they are headquartered reject the IDD. Originality/value Overall, consistent with the view that a loss of key personnel can be an additional risk factor, our results suggest that an increased likelihood of key talent outflow can lead to the formation of bad news, which in turn results in stock price crashes.
Authors: Xin Liu, Xiaoran Ni
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7162140600