How Does Delaware Incorporation Affect the Board of Directors?

29 Pages Posted: 29 Sep 2009 Last revised: 25 Feb 2012

See all articles by Pornsit Jiraporn

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Wallace N. Davidson

Southern Illinois University at Carbondale - Department of Finance

Pandej Chintrakarn

Mahidol University International College (MUIC)

Date Written: June 21, 2009

Abstract

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

Jiraporn, Pornsit and Davidson, Wallace N. and Chintrakarn, Pandej, How Does Delaware Incorporation Affect the Board of Directors? (June 21, 2009). Available at SSRN: https://ssrn.com/abstract=1480226 or http://dx.doi.org/10.2139/ssrn.1480226

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Wallace N. Davidson

Southern Illinois University at Carbondale - Department of Finance ( email )

Mail Code 4626
Carbondale, IL 62901-4626
United States
618-453-1429 (Phone)
618-453-5626 (Fax)

Pandej Chintrakarn

Mahidol University International College (MUIC) ( email )

999 Buddhamonthon 4 Road
Salaya, Nakhonpathom, 73170
Thailand
66 (0) 2441 5090 (Phone)
66 (0) 2441 9745 (Fax)

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