The Demand for Corporate Law: Statutory Flexibility, Judicial Quality, or Takeover Protection?

Posted: 29 Feb 2008

See all articles by Marcel Kahan

Marcel Kahan

New York University School of Law; European Corporate Governance Institute

Multiple version iconThere are 3 versions of this paper

Date Written: October 2006

Abstract

This article provides an empirical examination of the determinants of firms' decisions where to incorporate. Consistent with our theoretical predictions, we find substantial evidence that firms are more likely to incorporate in states with corporate law rules that offer firms flexibility to devise their governance arrangement and significant but less robust evidence that firms are more likely to incorporate in states with higher quality judicial systems. Unlike prior studies, we find no evidence that firms are more or less likely to incorporate in states with anti-takeover statutes. The latter results are consistent with the hypothesis that anti-takeover statutes have no significant effect on a company's marginal ability to resist takeovers.

Suggested Citation

Kahan, Marcel, The Demand for Corporate Law: Statutory Flexibility, Judicial Quality, or Takeover Protection? (October 2006). The Journal of Law, Economics, and Organization, Vol. 22, Issue 2, pp. 340-365, 2006, Available at SSRN: https://ssrn.com/abstract=1098691 or http://dx.doi.org/10.1093/jleo/ewj019

Marcel Kahan (Contact Author)

New York University School of Law ( email )

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European Corporate Governance Institute ( email )

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