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" Workplace Harassment Risk, Non-disclosure Agreements, and Information Flow "

Guido Friebel (Goethe U, Frankfurt), Yuping Jia (Frankfurt School of Finance and Management), Xiang Zheng (NHH, Bergen) , Menghan Zhu (Free University, Amsterdam)


We study the effects of regulation of non-disclosure agreements (NDAs) between firms and employees. We argue that laws that limit the use of NDAs (i) reduce harassment-related frictions in social interactions between employees and (ii) improve

information exchange in firms. Empirically, we find that legal insider trading becomes more profitable and less frequent, and firm value increases. The effects of the laws are stronger for individuals with high frictions in their social networks and for firms with
high reliance on private communication.