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 European Court of Justice’s landmark decision in Centros was heralded as creating the preconditions for a vibrant market for incorporations in the EU. In practice, however, today’s corporate landscape in Europe differs little from...Read more
This article analyzes the main problems and the solutions adopted in the market for Initial Coin Offerings (ICO), an alternative financing solution that has experienced spectacular growth and notoriety in recent years. This market relies on the...Read more
We study how parent liability for subsidiary environmental cleanup costs affects industrial pollution and production. Our empirical setting exploits a Supreme Court decision that strengthened parent limited liability protection for some...Read more
In this essay, I discuss the rise and fall of regulatory competition in corporate insolvency law in the European Union. The rise is closely associated with the European Insolvency Regulation (EIR, 2002), and it is well-documented. The UK has...Read more