References (40)



Do Delaware CEOs Get Fired

Murali Jagannathan

State University of New York (SUNY) at Binghamton

Adam C. Pritchard

University of Michigan Law School

March 23, 2015

U of Michigan Law & Economics, Olin Working Paper No. 08-024

Critics have charged that state competition in corporate law, which Delaware dominates, leads to a “race to the bottom” making management unaccountable. One metric of management accountability is forced CEO turnover, which we use to test the race to the bottom hypothesis. We find that Delaware CEOs are more likely to be forced out relative to firms incorporated in other jurisdictions. We show that aspects of Delaware law attract firms that plan to grow through merger or acquisition and are vulnerable to shareholder lawsuits. We also document differences in corporate governance that correlate with Delaware incorporation. After controlling for differences in governance, we find that firms incorporated in Delaware are still more likely to terminate CEOs, but that termination decision is less sensitive to poor performance.

Number of Pages in PDF File: 37

Keywords: Corporate governance, charter competition, CEO turnover

JEL Classification: G30, G34, K22

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Date posted: December 11, 2008 ; Last revised: March 24, 2015

Suggested Citation

Jagannathan, Murali and Pritchard, Adam C., Do Delaware CEOs Get Fired (March 23, 2015). U of Michigan Law & Economics, Olin Working Paper No. 08-024. Available at SSRN: http://ssrn.com/abstract=1313274 or http://dx.doi.org/10.2139/ssrn.1313274

Contact Information

Murali Jagannathan (Contact Author)
State University of New York (SUNY) at Binghamton ( email )
P.O. Box 6015
Binghamton, NY 13902-6015
United States
607-777-4639 (Phone)
Adam C. Pritchard
University of Michigan Law School ( email )
625 South State Street
Ann Arbor, MI 48109-1215
United States
734-647-4048 (Phone)
734-647-7349 (Fax)

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