Simplified Corporations and Entrepreneurship

Journal of Corporate Law Studies, Vol. 21, No.2, pp. 433-465, 2021

29 Pages Posted: 4 Nov 2021 Last revised: 17 Nov 2022

See all articles by Alvaro Pereira

Alvaro Pereira

Georgia State University College of Law

Date Written: August 24, 2021

Abstract

The World Bank's Doing Business project encourages the reduction of business registration requirements to stimulate entrepreneurship and economic development. Over the last two decades, it has contributed to the harmonisation of these requirements worldwide, but the rates of newly registered firms have not always followed through. Its unparalleled influence and emphasis on procedural reforms shadowed the development and comparative evaluation of alternative incentives to entrepreneurship.

This article contributes to filling this gap, by empirically examining the impact of simplified corporations, legal forms designed to stimulate entrepreneurial activity in Chile and Colombia. These new corporate forms provide not only abbreviated registration and operation rules, but also single ownership and the ability to issue classes of shares, two features that remain unavailable in many jurisdictions. The results confirm that company law reforms – both procedural and substantive – are insufficient to significantly increase the annual number of newly registered firms. Still, simplified corporations have quickly become entrepreneurs’ preferred legal form in those countries, contributing to expanding new businesses’ access to external finance.

Keywords: Regulation of entry, Entrepreneurship, Company law reform

JEL Classification: K22, L22, L26, L53, M13, O10

Suggested Citation

Pereira, Alvaro, Simplified Corporations and Entrepreneurship (August 24, 2021). Journal of Corporate Law Studies, Vol. 21, No.2, pp. 433-465, 2021, Available at SSRN: https://ssrn.com/abstract=3927925

Alvaro Pereira (Contact Author)

Georgia State University College of Law ( email )

P.O. Box 4037
Atlanta, GA 30302-4037
United States

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