Does Delaware Law Improve Firm Value?

57 Pages Posted: 29 Feb 2000

See all articles by Robert Daines

Robert Daines

Stanford Law School; Stanford Graduate School of Business; European Corporate Governance Institute (ECGI)

Date Written: November 1999


I present evidence that Delaware corporate law improves firm value and facilitates the sale of public firms. Using Tobin?s Q as an estimate of firm value, I find Delaware firms are worth significantly more than similar firms incorporated elsewhere. The result is robust to controls for firm size, diversification, profitability, investment opportunity and industry. Delaware firms also receive significantly more takeover bids and are significantly more likely to be acquired. Firms with strong incentives to choose valuable legal regimes are likely to incorporate in Delaware when they go public. These results suggest that corporate law affects firm value.

JEL Classification: G32, G34

Suggested Citation

Daines, Robert and Daines, Robert, Does Delaware Law Improve Firm Value? (November 1999). NYU Law School, Center for Law and Business, Paper No. 99-011; and Columbia Law School, Center for Studies in Law and Economics, Paper No. 159, Available at SSRN: or

Robert Daines (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-736-2684 (Phone)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
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1000 Brussels

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