Delaware's Compensation

53 Pages Posted: 26 Jun 2008  

Michal Barzuza

University of Virginia School of Law

Date Written: May 2008

Abstract

This Article illuminates the interdependence between the structure of Delaware's franchise tax and Delaware's corporate law. It makes three major arguments. First, different franchise tax structures would create different regulatory incentives for Delaware. Second, the current structure of Delaware's franchise tax law is suboptimal. A franchise tax that is sensitive to firm performance would be superior to Delaware's current franchise tax. It would align Delaware's incentives with those of shareholders and induce it to offer corporate law that maximizes shareholder value. It will have this effect even if Delaware faces no competition from other states over incorporations and even if shareholders are passive. Third, Delaware may not have sufficient incentives to reform its franchise tax law. The Article derives policy implications.

Keywords: Delaware, Corporate law, Franchise tax, Regulatory competition

JEL Classification: G30, G34, K22, H20, K34

Suggested Citation

Barzuza, Michal, Delaware's Compensation (May 2008). Virginia Law Review, Vol. 94, No. 3, p. 521, May 2008. Available at SSRN: https://ssrn.com/abstract=1148695

Michal Barzuza (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

Paper statistics

Downloads
125
Rank
186,881
Abstract Views
1,171