Adam C. Pritchard is the Frances and George Skestos Professor of Law at University of Michigan Law School; Murali Jagannathan is a Professor in the School of Management at Binghamton University (SUNY). This post is based on a forthcoming article by Professor Pritchard and Professor Jagannathan. Related research from the Program on Corporate Governance includes Firms’ Decisions Where to Incorporate by Lucian Bebchuk and Alma Cohen.
Our article, Do Delaware CEOs Get Fired?, to be published in January 2017 in the Journal of Banking & Finance, explores the relation between state corporate law and corporate governance. We focus on corporate governance in Delaware, the overwhelming winner in the competition for corporate charters. Delaware draws a clear majority of the nation’s largest public companies to incorporate under its corporate code, despite its relatively small population and share of the national economy. In 2014, nearly 89% of companies doing initial public offerings (IPOs) in the United States were incorporated in Delaware. This competition for corporate charters is not just about state pride: Winning the competition for incorporations yields tangible benefits: Charter fees made up more than a quarter of Delaware’s tax revenues in 2014.
