Trade Secret Protection and Foreign Acquirer Engagement

Marta Fernandez De Arroyabe Arranz, Christoph Grimpe, Katrin Hussinger

Research output: Contribution to conferencePaperResearchpeer-review


We study whether strengthened legal protection of trade secrets increases a firm’s likelihood of being acquired by another firm. Strengthened protection may increase the attractiveness of a potential target firm because trade secrets are better protected from misappropriation. But it may also decrease attractiveness because of higher information asymmetries between an acquiring and target firm. Using the staggered implementation of the Uniform Trade Secrets Act (UTSA) in the U.S., we show that strengthened trade secret protection increases the likelihood of being acquired. However, we find that foreign and domestic acquirers are differentially impacted by the legal change. Foreign acquirers prefer to engage in a minority acquisition rather than taking full control of a target. We attribute this finding to the higher risk associated with fully acquiring a target firm in an unfamiliar institutional context that foreign firms may seek to compensate for by acquiring only a minority stake.
Original languageEnglish
Publication date2022
Number of pages40
Publication statusPublished - 2022
EventDRUID22 Conference - Copenhagen Business School, Frederiksberg, Denmark
Duration: 13 Jun 202215 Jun 2022
Conference number: 43


ConferenceDRUID22 Conference
LocationCopenhagen Business School
Internet address


  • Trade secret protection
  • Firm acquisitions
  • Foreign versus domestic acquirers
  • Uniform Trade Secrets Act (UTSA)

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