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State and Local Government Law

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Empirical studies

2021

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Is There A Delaware Effect For Controlled Firms?, Edward Fox Jan 2021

Is There A Delaware Effect For Controlled Firms?, Edward Fox

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The impact of Delaware incorporation on firm value remains a central question in corporate law. Despite the difficulty scholars have had in agreeing on an answer to this question, there is a consensus that Delaware has long enjoyed stable and important advantages in the expertise of its judiciary and its extensive case law. These advantages are believed to be particularly important for firms with a controlling shareholder. This Article attempts to empirically measure the effect of Delaware incorporation on these controlled firms and thus helps us understand the market value of Delaware’s judiciary and case law. It finds, surprisingly, that …