Yuanqing (Lorna) Zhong

Working Papers

• Non-Compete Agreements and the Market for Corporate Control (with Andrey Golubov)

Non-compete agreements (NCAs) limit outside employment options and, therefore, increase personal costs of job displacement for managers. Using state-level changes in NCA enforceability as a natural experiment, we find that managers are more averse to horizontal takeovers when NCA enforcement tightens. In particular, higher enforceability is associated with fewer same-industry takeovers. Those that do materialize are more likely to be hostile, involve higher premiums, and are less likely to complete. Overall, the findings indicate that the use of NCAs and their enforceability have important implications for the market for corporate control.

Presentations: European Finance Association (EFA, Scheduled) 2026, Johnston Centre Research Roundtable 2026, American Finance Association (AFA) 2025, Financial Intermediation Research Society (FIRS) 2025, American Law and Economics Association (ALEA) 2024, University of Toronto (Rotman) 2023

Work in Progress

• Litigation Risk in the Market for Corporate Control (with Adel Khusnulgatin)

The prior literature shows that when operating firms are drawn into patent litigation, they are more likely to merge. Litigation can create pressure on a small defendant, pushing it into the hands of acquirers. It can also pressure a larger defendant, prompting it to acquire a smaller plaintiff. In contrast, we find that when litigation risk rises because peers face patent lawsuits from non-practicing entities, acquisition activity declines. Potential buyers become concerned about contamination risk and reduce their demand for targets. In short, realized litigation risk can stimulate acquisitions, but heightened ambient litigation risk deters them.