Abstract

http://ssrn.com/abstract=1126257
 
 

References (49)



 
 

Citations (3)



 


 



Where are Limited Liability Companies Formed? An Empirical Analysis


Jens Dammann


University of Texas at Austin - School of Law

Matthias Schundeln


Goethe University Frankfurt

April 28, 2008

U of Texas Law, Law and Econ Research Paper No. 126
3rd Annual Conference on Empirical Legal Studies Papers

Abstract:     
We empirically study the incorporation choices or, more accurately: formation choice, of limited liability companies. Most of the firms in our large sample of more than 64,000 limited liability companies are formed in the state where their principal place of business is located (the PPB state). As their size increases, however, firms become more likely to be formed outside that state, with Delaware emerging as the primary destination for those that are not formed in the PPB state. In particular, of those firms that have 1,000 or more employees, roughly half are formed outside their home state, and of the latter, more than 80% are formed in Delaware.

We show that substantive law matters to the formation choices of closely held limited liability companies. More specifically, limited liability companies appear to be migrating away from those states that offer lower levels of protection for minority investors: We find statistically significant evidence that firms are less likely to be formed in their PPB state if the latter offers relatively lenient rules on managerial liability or if it allows companies to be dissolved via a less than unanimous resolution of the members.

Number of Pages in PDF File: 37

Keywords: incorporation, market for corporate law, limited liability company, LLC, regulatory competition, Centros, formation, race to the bottom, race to the top, Cary, fiduciary duties, oppression, dissolution, veil-piercing, veil, courts

JEL Classification: G30, G38, H70, K22

working papers series


Download This Paper

Date posted: April 30, 2008 ; Last revised: May 5, 2008

Suggested Citation

Dammann, Jens and Schundeln, Matthias, Where are Limited Liability Companies Formed? An Empirical Analysis (April 28, 2008). U of Texas Law, Law and Econ Research Paper No. 126; 3rd Annual Conference on Empirical Legal Studies Papers. Available at SSRN: http://ssrn.com/abstract=1126257 or http://dx.doi.org/10.2139/ssrn.1126257

Contact Information

Jens Dammann (Contact Author)
University of Texas at Austin - School of Law ( email )
727 East Dean Keeton Street
Austin, TX 78705
United States
Matthias Schundeln
Goethe University Frankfurt ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
Feedback to SSRN


Paper statistics
Abstract Views: 2,302
Downloads: 501
Download Rank: 20,792
References:  49
Citations:  3

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 0.438 seconds