How Does Delaware Incorporation Affect the Board of Directors?
29 Pages Posted: 29 Sep 2009 Last revised: 25 Feb 2012
Date Written: June 21, 2009
This study investigates the impact of Delaware law on the composition and size of the board of directors. Our empirical evidence reveals that Delaware firms have smaller and more independent boards than their non-Delaware counterparts. Given that we find no value-premium for firms that incorporate in Delaware, we interpret our findings as being consistent with Delaware law benefiting managers. The more shareholder-friendly boards in Delaware exist to offset the benefits that managers derive from Delaware incorporation.
Keywords: Delaware, incorporation, agency theory, agency costs, board of directors
JEL Classification: G30, G34, G38
Suggested Citation: Suggested Citation