Law Commons^™

Delaware’S Familiarity, Brian J. Broughman, Darian M. Ibrahim

San Diego Law Review

This Article builds on our prior empirical research showing that, everything else equal, start-up firms financed by out-of-state investors are more likely to incorporate in Delaware. We argue that this finding is due to out-of-state investors’ familiarity with Delaware corporate law, and relative lack of familiarity with the corporate law of the start-up’s home state. In the current project, we extend our prior research by (i) developing an informal model distinguishing investor familiarity from related economic theories of network effects and learning effects, (ii) showing that our data are more consistent with familiarity than with these alternative explanations, and (iii) …