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The Myth of State Competition in Corporate Law

Marcel Kahan
New York University - School of Law

Ehud Kamar
University of Southern California - Gould School of Law; European Corporate Governance Institute (ECGI)

Stanford Law Review, Vol. 55, p. 679, 2002

Abstract:
This Article challenges the conventional wisdom that states compete for incorporations. Delaware aside, no state stands to gain meaningful tax revenues or legal business from chartering firms, and no state takes significant steps to attract incorporations. The explanation for this apathy lies in a combination of economic entry barriers and political factors. This analysis of the market for incorporations has implications for the present structure of corporate law, for the desirability of federal intervention, and for theories of regulatory competition in general.

Keywords: Delaware, Incorporation, Corporate Charters, Corporate Governance, Regulatory Competition, Managers, Shareholders, Takeovers, Barriers to Entry, Network Externalities, Federalism, Legislation, Public Choice, Political Economy, Franchise Tax

JEL Classifications: G30, G38, H70, K22, H25, H71, H73, L13, R58

Accepted Paper Series

Date posted: January 02, 2003 ; Last revised: November 08, 2005

Suggested Citation

Kahan, Marcel and Kamar, Ehud, The Myth of State Competition in Corporate Law. Stanford Law Review, Vol. 55, p. 679, 2002. Available at SSRN: http://ssrn.com/abstract=334120 or doi:10.2139/ssrn.334120

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Contact Information

Ehud Kamar (Contact Author) University of Southern California - Gould School of Law ( email ) 699 Exposition Boulevard Los Angeles, CA 90089 United States (213) 740-4791 (Phone) (213) 740-5502 (Fax) HOME PAGE: http://law.usc.edu/contact/contactInfo.cfm?detailID=225
European Corporate Governance Institute (ECGI) ( email ) c/o ECARES ULB CP 114 B-1050 Brussels Belgium
Marcel Kahan New York University - School of Law ( email ) 40 Washington Square South New York, NY 10012-1099 United States 212-998-6268 (Phone) 212-995-4341 (Fax)