The competition by states for incorporations has long been the subject of extensive
scholarship. This article tries to deconstruct the state competition debates by showing that scholars are engaged in three separate debates that are only loosely connected to each other. The first, ?directional?
debate concerns whether firms, if given a choice, will chose corporate law rules that maximize shareholder value or managerial benefits. Resolution of this question is relevant regardless of whether states ?compete.? All it takes to make this question important is for firms to have a meaningful choice among legal rules. The second, ?competition? debate concerns whether, how, and which states compete for incorporations. Depending on what is meant by ?competition?, competition can exist even in a regime where firms have no choice over where they incorporate and may not exist in a regime where firms have free choice. The third, ?federalism? debate concerns the shape a mandatory corporate law would take if such a law were enacted. Separating these three conceptually distinct questions, and the evidence relevant to each, yields a better understanding of the arguments made by the partisans in the state competition debate and of the issues that remain unresolved.
The analysis of corporate governance has been a one-sided affair. The focus has been on “internal” accountability mechanisms, namely boards and shareholders. Each has become more effective since debates about corporate governance began in earnest...Read more
An important question in banking is how strict supervision affects bank lending and in turn local business activity. Forcing banks to recognize losses could choke off lending and amplify local economic woes. But stricter supervision could also...Read more
Exploiting the 2009 amendments to Regulation S-K, we provide unique evidence on the first-time disclosure of the reasons firms state for combining (separating) the roles of CEO and chairman. The stated reasons support both agency theory and...Read more
This Essay entertains the idea that Delaware’s corporate law is set on a trajectory that would eventually lead to reforming its doctrine of entire fairness as we now know it by retiring the doctrine’s substantive fairness review prong and...Read more