N. Kagan Kocaoglu J.S.D

(}EOR(}ETOW:J,.(,'UNI//ERSITY .fdIf/ GENTER N. Kagan Kocaoglu J.S.D. Candidate Attorney-at-Law, New York; Ankara LL.M., Virginia; LL.M., Ankara Cell: (202) 997-0917

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Communication regarding this dissertation project:

Kagan Kocaoglu

(pronounced Cahn Kojaolu)

Email: [email protected]

Tel. (202) 997-0917

Address for the initial bounded copy:

7329 Radcliffe Drive College Park, MD 20740

Permanent Address:

2501 Calvert St. NW Apt. 209 Washington, DC 20008

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e 11fGrm/11ate Programs

CERTIFICATE OF COMPLETION OF S.J.D. REQUIREMENTS

TO: Denise Seeley, Registrar

SUBJECT: Necip K Kocaoglu, S.J.D. Candidate

DATE: April 30, 2008

This is to certify that Mr. Necip K. Kocaoglu, a candidate for the degree of Doctor of Juridical Science (S.J.D.) at Georgetmvn University Law Center, has completed the required period of residence and has submitted a dissertation entitled:

"Regulatory Competition in Corporate Law"

He has been examined by a panel consisting of three members of the faculty: Professor Feinerman, who was also the thesis supervisor, Professor Diamond, and Professor Dinh. The panel recommends that the dissertation be accepted and that Mr. Necip K. Kocaoglu be awarded the degree of Doctor of Juridical Science,w i th di S, h D c.h c,~ on the next date for conferral of degrees by the Law Center.

~-y.~ ~mes Feinerman Sur.ervising Professor ! ,-/7 I .. I -~/2 ~~z'tu~"~/./ ,·· ._.'/. f(#~k-tC._e_...:,./7 / \Veridy Collins Perdue Associate Dean for Graduate Programs

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Georgetown University Law Center Doctor of Juridical Science Program

REGULATORY COMPETITION IN CORPORATE LAW

Necip Kagan Kocaoglu (pronounced Cahn Kojaolu) LL.M. (2004, Virginia), LL.M. (2001, Ankara)

Submitted to Georgetown University Law Center Office of Graduate Programs and the Faculty of Georgetown University Law Center in partial fulfillment ofthe requirements for the degree of Doctor ofJuridical Science (S.JD.)

P, /:' GJEORf/E'fr)ff'.'J{, r-l ( ,V/VERSITY ~fF L'JL\'TFR

e of ()r(l(/rtate Programs

CERTIFICATE OF COMPLETION OF S.J.D. REQUIREMENTS

TO: Denise Seeley, Registrar

SUBJECT: Necip K Kocaoglu, S.J.D. Candidate

DATE: April 30, 2008

This is to certify tl1at Mr. Necip K. Kocaoglu, a candidate for the degree of Doctor of Juridical Science (S.J.D.) at Georgetown University Law Center, has completed the required period of residence and has submitted a dissertation entitled:

"Regulatory Cornpetition in Corporate Law"

He has been examined by a panel consisting of three members of the faculty: Professor Feinerrnan, who was also the thesis supervisor, Professor Diamond, and Professor Dinh. The panel recommends that the dissertation be accepted and that Mr. Necip K. Kocaoglu be awarded the degree of Doctor of Juridical Science,Wi rb ol IS, h' V\c.h "~ on the next date for conferral of degrees by the Law Center.

~-y~ tfrofessor James Feinerman Supetvising Profes soi: ~fe~·- )k;t;ke:-/ \Xleridy Collins Perdue Associate Dean for Graduate Programs

6()(7 :\',.11.:, .li.'IS1:')' /if.'1'/1/Ji! :VIV ll'r1s/Ji11g1011 /)C !.tl1)1)J-Nll Ill'!.) 66](1,Wi P~1x:(.Nl! 66.!JJ./87

MY FATHER

ATTY. PROF. DR. A. MEHMET KOCAOGLU

AND

MY MOTHER

DONE KOCAOGLU

WHO PROVIDED EVERY OPPORTUNITY

TO REALIZE MY DREAMS

I would especially like to thank my supervisor,

PROF. JAMES V. FEINERMAN,

for his generous time and commitment. He continually stimulated my analytical thinking and

greatly assisted me with writing.

I also owe a special debt to other committee members

PROF. VIET DINH

and

PROF. RICHARD DIAMOND.

I wish to thank

PROF. DR. CELAL GOLE of University ofAnkara School ofPolitical Sciences, for inspiring and encouraging me to pursue

a doctoral degree in Georgetown University.

I also gratefully acknowledge the ever failing support from true friends:

SELEN G. TOLU,

KATHERINE DUNN,

MUNSOOR HUSSAIN,

and

AHMED S. MOUSA.

ABSTRACT

Necip Kagan Kocaoglu, S.J.D. May, 2008 Georgetown University Law Center

This dissertation project is composed of three parts.(l) State Legislation and

Corporate Mobility, (2) Doctrinal Foundations of the Charter Market, (3) A

Comparative Bibliography: Regulatory Competition in Corporate Law.

Until now, state statutes on the transformation of an enterprise are neglected by corporate law research until now. "State Legislation and Corporate Mobility" seeks to compare the domestication and conversion provisions of state corporate laws, including the Delaware General Corporation Law and the Model Business

Corporation Act, and evaluates the current law pursuant to the theories on state competition. Furthermore, this study analyzes the factors affecting the selection of the legal platform, and examines the mechanics of organizational transformation from a transactional and normative perspective. Finally, the discussion focuses on the potential benefits of an expedited domestication and conversion process out of incorporation jurisdiction.

"Doctrinal Foundations of the Charter Market" discusses the existing theories on the production of corporate law with a perspective of the federal and state measures to protect the corporate law domain of Delaware proprietary lock-in in

Delaware.

"A Comparative Bibliography: Regulatory Competition in Corporate Law"

1 compiles the contributions made by lawyers, economists, and judges on the role of regulatory competition on corporate laws. Academicians of American corporate law have discussed the effects of regulatory competition on corporate laws for over the last three decades. The span and the range of this continuing debate have brought a great deal of attention to this issue. Literature on theoretical framework of the regulation competition, corporate law federalism, corporate mobility, proposed corrections to charter market, federal interventions to corporate law and European contributions to the academic discourse are covered in this compilement.

2 Georgetown University Law Center Doctor of Juridical Science Program

STATE LEGISLATION AND CORPORATE MOBILITY

Necip Kagan Kocaoglu (pronounced Cahn Kojaolu) LL.M. (2004, Virginia), LL.M. (200 I, Ankara)

Until now, state statutes on the transformation of an enterprise are neglected by corporate law research until now. This paper seeks to compare the domestication and conversion provisions of state corporate laws, including the Delaware General

Corporation Law and the Model Business Corporation Act, and evaluates the current law pursuant to the theories on state competition. Furthermore, this study analyzes the factors affecting the selection of the legal platform, and examines the mechanics of organizational transformation from a transactional and normative perspective.

Finally, the discussion focuses on the potential benefits of an expedited domestication and conversion process out of incorporation jurisdiction.

Georgetown University Law Center Doctor of Juridical Science Program

STATE LEGISLATION AND CORPORATE MOBILITY

Necip Kagan Kocaoglu (pronounced Cahn Kojaolu) LL.M. (2004, Virginia), LL.M. (2001, Ankara)

May 2008

TABLE OF CONTENTS

Introduction ...... I I. Selection ofthe Legal Plaiform ...... 7 A. Motives for Jurisdiction Selection ...... 7 1. Dissatisfaction with the Legal Regime: Voice vs. Exit ...... 9 2. Change of Jurisdiction Equilibrium ...... 12 3. Regulatory Arbitrage ...... 15 4. Transactional Migration ...... 19 4. Agency Problems ...... 22 5. Migrating Corporations' Structure ...... 24 6. State Predation ...... 25 7. Tax Savings ...... 26 8. Efficient Corporate Law ...... 28 9. Takeover Protection ...... 28 10. Avoiding Mandatory Rules ...... 32 11. Herd Behavior ...... 35 12. Home State Bias ...... 36 13. Lawyers' Role ...... 41 B. Jurisdictional Changes and Shareholder Wealth ...... 45 l. Allocation of the Burden of Proof ...... 46 2. The Role of Empirical Studies ...... 47 3. Methodological Obstacles to Effective Evaluation ...... 49 4. Investors' Appraisal of the Corporate Law ...... 50 5. Delaware Premium ...... 53 6. Extension of Control Premium ...... 54 7. The Diminishing Significance of the Corporate Law ...... 58 II. Modes ofLegal Transformation ...... 62 A. Choice of Law ...... 62 B. Secondary Charter Market Transactions ...... 64 1. Domestication ...... 71 2. Reincorporation ...... 74 3. Conversion ...... 80 4. Hybrid-Changes ...... 87 5. Insurance Redomestication ...... 88 6. Tax Inversions ...... 93 7. Multiple Incorporations ...... 97 8. War-Time Domicile Changes ...... 101 Ill Mechanics of the Transformation ...... 103 A. The Law Governing Legal Metamorphosis ...... 103 B. Phases of Jurisdictional Change ...... 105 I. Board of Directors' Authority ...... 105 2. Plan of Domestication and Merger ...... 107 3. Disclosure Requirements ...... 108 4. Approval of Jurisdictional Change ...... 11 O 5. Approval of Organizational Change ...... 116 6. Changing the Course of Jurisdictional and Organizational Changes ...... 116 7. Effectuation ofthe Change ofDomicile ...... 119 C. Legal Significance of Jurisdictional Changes ...... 123 1. Change of the Applicable Law ...... 123 2. Amendment of Organic Law ...... 124 3. Continuation of Corporate Personality ...... 125 4. Property Rights & Liabilities ...... 127 5. Transitional MBCA Rule ...... 130 6. Shareholders' Rights ...... 132 7. Abandonment ...... 135 8. Charter Surrender ...... 137 9. Perpetuality of the Corporation ...... 139 D. The Interrelationship between Domestication, Conversion and Merger Statutes ...... 142 IV. Barriers on Institutional Transformation ...... 145 A. Structure of the Charter Market ...... 145 B. Major Obstacles to a Functioning Market ...... 148 1. Exit Route ...... 149 2. Costs of Jurisdictional Changes ...... 152 3. Shareholders' Access to Jurisdictional Changes ...... 158 4. Shareholders Approval for Jurisdictional Changes ...... 159 5. Unanimous Voting Requirements ...... 162 6. Appraisal Rights ...... 165 8. Sarbanes-Oxley Prohibition of Evasion ...... 167 9. Exit Toll ...... 168 C. Towards a Free Charter Market ...... 171 1. Federal Guarantee to Unencumbered Jurisdictional Changes ...... 171 2. Position for an Exit ...... 176 Conclusion ...... 177

ii STA TE LEGISLATION AND CORPORATE MOBILITY

1 KAGAN KOCAOGLU

Introduction

Come, come again, whoever you are, come! Heathen, fire worshipper or idolatrous, come! Come even if you broke your penitence a hundred times, Ours is a portal of hope, come as you are. 2

Similar to a real person, a corporation enjoys many rights in its perpetual

life for legal purposes. Corporations may emigrate and reincorporate as real

persons migrate. Similar to real persons changing their personal status,

corporations can change their organizational status ceasing their corporate

existence and conduct business through an unincorporated entity.

The role of the states in corporate law regulation has been debated in the

U.S. for more than three decades. There is a split among corporate law academics

on the role of state competition in the corporate charter market. Competitive

federalism proponents suggest that the U.S. secondary corporate charter market is

established by the corporate reincorporation process.3 States compete in order to

increase revenues arising from the volume of incorporations within their jurisdiction. States benefit from the increase in the number of domestic

1Member of University of Ankara, Business Administration Department. 2 See Mevlana J. Rumi, Spiritual Couplets, § 24 (1273) (in Turkish). The United Nations Educational, Scientific and Cultural Organization ("UNESCO") marked the year 2007 as the "Mevlana Year" to celebrate the 800th anniversary of his birth. 3 See ROBERTA ROMANO, THE ADVANTAGE OF COMPETITIVE FEDERALISM FOR SECURITIES REGULATION, at 64 (2002). incorporations.4 This state competition in corporate charters is dependent upon the free flow of corporations through domestication, conversion and reincorporation statutes. For this reason, domestication, conversion and reincorporation statutes are substantial instruments of a state in the corporate charter market. The charter market may be facilitated only if corporate migration statutes enable corporations to move more freely. Domestication and conversion statutes allow corporations to choose their legal form and regime with minimal legal implications and tax consequences. It is clear that a market for corporate charters may not work, if corporations are unable to move without restraint. In other words, the corporation as a rational person will not migrate if regulatory and financial burdens associated with corporate migration exceed the benefits of the new legal regime. Thus, the debate on the role of state competition is dependent upon the mobility of the corporations.

Further, proponents of competitive federalism contend that states follow

Delaware and replicate Delaware's code in order to compete in the charter market.5 However, generalizations should be avoided as one size does not fit all.

Delaware amended its domestication and conversion provisions following the

Model Business Corporation Act's ("MBCA") Chapter 9 codification to replicate the latter's provisions. This paper argues that the MBCA took a more innovative

4 See William Cary, Corporate Law and Federalism: Reflections Upon Delaware, 83 YALE L.J. 663, 668 (1974), Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. ECON. & ORG. 225, 255-58 ; Jonathan R. Macey & Geoffrey P. Miller, Toward an Interest- Group Theory of Delaware Corporate Law, 65 TEX. L. REV. 469, 492 (1987) (discussing that incorporations affects legal professionals); States will also gain from the input in the local economy which increases the state revenues. 5 Id, at 77; Lawrence A. Cunningham, The New Corporate Law - The 1999 Model Business Corporation Act, 71 ASPEN L. & Bus. CORP. 1,5 (May 15, 2000).

2 and responsive (liberal) approach to the necessities of corporate domestication and conversion than Delaware law.

Much has been written on state competition.6 Excluding conversions in the health care sector,7 legal statutes on the transformation of an enterprise are neglected by corporate law research although legal works in Germany focusing on corporate migration have been published as early as 1932.8 Some commentators evaluated the 1999 Delaware amendments permitting conversion with a unanimous vote as a technicality not concerning corporate govemance.9 However, change of legal platform statutes are not a mere technicality. Protective states

6 See Marcel Kahan & Edward Rock, Symbiotic Federalism and the Structure of Corporate Law, 58 Vand. L. Rev. 1573, 1575 (October, 2005) (noting that the academic literature on state competition in the charter market is continuously growing); See Ehud Kamar, Beyond Competition for Incorporations, 94 Geo. L.J. 1725, 1726-7 (2006) ("Nearly half a century of legal scholarship has produced scores of articles explaining state corporate laws in the United States as products of just such competition."). 7 Mass conversions of the non-profit corporations in the health care sector drew public and academic attention and there is still a debate going on the conversions in the health care sector. See for some these works in this area, Lawrence E. Singer, The Conversion Conundrum: The State and Federal Response to Hospitals' Changes in Charitable Status, 23 Am. J. L. and Med. 221 (1997); SYMPOSIUM: LEGAL ISSUES FOR NONPROFITS: William C. Kellough, Affiliations, Sales, and Conversions Involving Non-Profit and For-Profit Healthcare Organizations in Oklahoma, 33 Tulsa L.J. 521 (Winter, 1997); David A. Hyman, Hospital Conversions: Fact, Fantasy, and Regulatory Follies, 23 Iowa J. Corp. L. 741 (Summer, 1998); SEVENTEENTH ANNUAL HEALTH LAW SYMPOSIUM: Patrick K. Moore, Gary S. Mendoza, John P. Krave, James R. Schwartz, Legal Issues in Selling and Converting Non-Profit Health Care Organizations, 20 Whittier L. Rev. 351 (Winter, 1998); Kevin F. Donohue, Crossroads in Hospital Conversions - A Survey of Nonprofit Hospital Conversion Legislation, 8 Ann. Health L. 39 (1999); Phill Kline & Reid F. Holbrook, Protecting Charitable Assets in Hospital Conversions: An Important Role for the Attorney General, 13 Kan. J.L. & Pub. Pol'y 351 (Spring, 2004). 8 JOACHIM VON SPINDLER, WANDERUNGEN GEWERBLICHER KOERPERSCHAFTEN VON STAAT ZU STAAT ALS PROBLEM DES fNTERNEN UNO DES INTERNATIONALEN PRIVATRECHTS (MIGRATION OF BUSINESS CORPORATIONS FROM STATE TO STATE AS A PROBLEM OF DOMESTIC AND INTERNATIONAL LAW), (Berlin: Carl Heymanns Verlag; 1932). Legal practitioners should focus on English law where foreign corporations may be deemed resident and domestic corporations may be deemed non resident (A.N.S., Book Review, 33 Colum. L. Rev. 196, 96-97 (Jan., 1933)) [citations omitted]. 9 See Kahan & Rock, Symbiotic Federalism, supra note 5, at 1601-02.

3 were amending their anti-takeover statutes while the Delaware legislature's focus was on amending its conversion statute. 10

This paper seeks to compare the domestication and conversion provisions of state corporate laws including the MBCA and the Delaware General

Corporation Law ("DGCL") and evaluates the current law pursuant to the existing theories on state competition. Many commentators have suggested that state competition for corporate charters does not actually exist. 11 This study concludes that Delaware law hinders corporate migration to other jurisdictions by overburdening the domestication and conversion of corporations out of Delaware.

The cause of lack of competition among states is unduly burdensome charter market movements. Delaware requires unanimous shareholder approval for corporations withdrawing from Delaware. This fact calls into question the belief held by competitive federalism proponents that corporations are incorporated in

Delaware because of its efficient corporate law rules. Substantive provisions of the Delaware corporate law and the balance of regulation between the states suggest that corporations are locked in Delaware. Consequently, this study recommends that an expedited domestication and conversion process out of

Delaware will facilitate the corporate charter market.

In Part I, I propose a model for the selection of the legal platform regarding corporate law issues. Extralegal factors and a lawyer's role in the selection of the jurisdiction are discussed. The location of the transactional

10 See Kahan & Rock, Symbiotic Federalism, supra note 5, at 1602 fn. 110 (Maryland adopted the Maryland Unsolicited Takeover Act) 11 Marcel Kahan & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 STAN. L. REV. 679, 684 (December, 2002).

4 migration and regulatory arbitrage in the voice-exit model is discussed with other factors influencing the jurisdictional change decisions. After reviewing the empirical studies conducted by prominent scholars, I conclude that the importance of corporate laws is substantially diminished. A combination of the empirical studies on tax inversions with the empirical studies on reincorporations produces an insight that tax considerations are superior to corporate law considerations from the viewpoint of U.S. multinational corporations.

Part II provides the transactions needed to effectuate jurisdictional and organ'izational changes in the state codes. The jargon of the academic debate on the role of state competition does not match with the statutory codebooks. The terminology of the state codes is clarified in order to distinguish between the transactions effecting the legal platform selection.

Part III examines the mechanics of the jurisdictional and organizational changes from a normatic perspective. The law governing the legal platform selection, procedures and processes to effectuate such change and the legal implications of such a change is discussed from a comparative law perspective. I conclude that the state legislation is redundant and poorly drafted after a thorough evaluation of the rules. The principle of the perpetuality of corporations is sufficient to maintain the continuity of a corporate enterprise. It is not appropriate to subject change of organizational and jurisdictional choice transactions to the change of control transactions legal framework.

Part IV considers the impediments on jurisdictional and organizational changes. In this section, a comparison of the MBCA and the DGCL creates an impression that the MBCA is more liberal than the DGCL on corporate

5 domestications. It is the author's view that the law regarding organizational and jurisdictional choice should be reformed. Under the state law, there is a need for a rapid way to convert, domesticate and reincorporate. After reviewing the charter market's structure and its failures, I conclude that a "position for exit" fortified with unilateral shareholders' access to the initiation of relocation decisions, without the requirement of shareholders' approval and appraisal rights is the most suitable mean to facilitate the charter market. However, I find that expecting federal reform in the charter market is futile given the fact that Congress blocked the trade liberalization option in the charter market with anti-inversion provisions.

6 I. Selection of the Legal Platform

A. Motives for Jurisdiction Selection

Migrating corporations are marginal customers of the corporate charter

market. 12 Thus, states concentrate on the factors influencing reincorporation

decisions for improvement so as to attract more corporate citizens to their jurisdiction.13 Scholars classified motives for jurisdictional changes from the

statements prepared by managers located in the proxy statements as follows: 14 (1)

establish takeover defenses, (2) reduce director liability, (3) pursue a jurisdiction

with more flexible and predictable corporation laws, (4) realize tax or franchise

fee savings, (5) reconcile the legal and operating domicile of the firm, and (6)

facilitate acquisitions. Empirical studies have found that relocations are triggered

12 See William W. Bratton & Joseph A. McCahery, Regulatory Competition, Regulatory Capture, and Corporate Self- Regulation, 73 N.C. L. Rev. 1861 (1995); Ian Ayres, Supply-Side Inefficiencies in Corporate Charter Competition: Lessons from Patents, Yachting and Bluebooks, 43 U. Kan. L. Rev. 541, 561 ( 19952 (agreeing_ with Bratton & McCahery). Id. (noting that this is an application of the model in A. Michael Spence, Monopoly, Quality, and Regulation, 6 Bell J. Econ.417,417-18(1975D. 13 See Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in C01porate Law, 105 Harv. L. Rev. 1435, 1452-4 (1992); William W. Bratton, Delaware Law as Applied Public Choice Theory: Bill Cary and the Basic Course after Twenty- Five Years, 34 Ga. L. Rev. 447, 450 (1999-2000) (agreeing with Bebchuk); Bratton & McCahery, Regulation, supra note 1 I at 186 I; Ayres, Supply-Side Inefficiencies, supra note I I at 561 (agreeing with Bratton & McCahery). Id. (noting that this is an application of the model in A. Michael Spence, Monopoly, Quality, and Regulation, 6 Bell J. Econ. 417, 417-18 (1975)). 14 See Randall A. Heron & Wilbur G. Lewellen, An Empirical Analysis of the Reincorporation Decision, 33 The Journal of Financial and Quantitative Analysis 549, 553 (Dec., 1998). Heron and Lewellen see the first motive as "managerial entrenchment motive" and the rest as "measures taken to improve the efficiency of the firm's contracting opportunities." (See Heron & Lewellen, Reincorporation, supra note 13, at 553).

7 either to take benefit of the amendments in corporate laws of the host or destination jurisdiction or to engage in fundamental transactions.15 The motivations for relocation may vary, but it should be noted that jurisdictional change decisions are usually initiated by the lawyer. 16

Some commentators note that the managers make transformational decisions continuously in a corporate organization. They note that not engaging in a corporate transformation transaction is an implicit decision preferring the host decision. 17 However, while existence of an activity often shows an underlying positive decision, the opposite is not true as lack of activity does not always indicate an underlying negative decision. Indeed, managers do not continuosly make transformational decisions. First, multiple reincorporation transactions are not frequent. Only 5% of relocating NYSE firms reincorporate more than once in a two-decade period. 18 Moreover, most of the NYSE firms do not engage in migration at all as public firms usually do not change the incorporation state after the IP0. 19

15 See Peter Dodd & Richard Leftwich, The Market for Corporate Charters: "Unhealthy Competition" Versus Federal Regulation, 53 J. Bus. 259, 267 (1980) 16 See Romano, Product, supra note 3, at 274; Robert Daines, The Incorporation Choices of !PO Firms, 77 N.Y.U.L. Rev. 1559, 1580 (Dec., 2002) (agreeing with Romano). 17 See Barry D. Baysinger & Henry N. Butler, The Role of Corporate Law in the Theory of the Firm, 28 J.L. & Econ. Rev. 179, 181-5 (1985) (discussing reincorporations); See Bebchuk, Desirable Limits, supra note 12, at 1459 (noting that corporations make implicit or explicit reincorporation related decisions) 18 See Roberta Romano, The Genius of American Corporate Law (1993) at 34-5. 19 See Robe1i Daines, Does Delaware law improve firm value? 62 J. Fin. Econ. 525, 550 (2001) (noting that "the domicile of mature firms is relatively exogenous.")

8 1. Dissatisfaction with the legal Regime: Voice vs. Exit

Albert Hirschman set forth the famous dichotomy between "exit and voice" in his seminal book. Voice is the representation of the dissatisfaction within an organization or jurisdiction whereas exit is the activity resulting from the dissatisfaction within an organization or jurisdiction without dealing with the problem. Mutual exclusivity of both options is axiomatic in Albert Hirschman's model. In this model, the level of loyalty determines which option will prevail.20

Psychological reflection of the voice or exit paradigm is the dilemma between

"fight or flight". 21

Exit and mobility are the backbone of a regulatory competition system.22

The voice and exit dichotomy come to play in the regulatory competition area in the form of lobbying before the state legislature or migrating out of the jurisdiction. Management can lobby or reincorporate in other jurisdictions in order to show their discontent with the state of incorporation.23 This exit option is not available to individual shareholders as only the corporations may exit a

20 Albeti 0. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Harvard Uni. Press; 1970). 21 "When a person is confronted by a threat, he or she experiences a psychological and physiological response commonly known as "fight or flight."" (See Hale E. Sheppard, Fight or Flight of US-Based Multinational Businesses: Analyzing the Causes for, Effects of, and Solutions to the Corporate Inversion Trend, 23 NW. J. INT'L L. & BUS. 551 (Spring, 2003) (citing Wayne Weiten, Pscyhology Themes and Variations 68 (5th ed. 2002))). 22 See Frank Easterbrook, Federal and European Business Law, 14 int'/ Rev. L. & Econ. 125, 127 (1994). 23 See William J. Carney, Explaining the Shape of Corporate Law: The Role of Competition, 18 Manage. Decis. Econ. 611, 615 (1997); Joel F. Henning, Federal Corporate Chartering for Big Business: An Idea Whose Time Has Come, 21 DePaul L. Rev. 915, 916 (1971-1972) (Corporations will migrate if they don't accept corporate law amendments); Easterbrook, European, supra note 21, at 127 (noting that the U.S. corporations may reincorporate in other jurisdictions if they are dissatisfied with the corporate law).

9 jurisdiction in a regulatory competition system.24 An actual exit is not necessary for the functioning of a regulatory competition market. The possibility of the exit makes the market work.25

Dissatisfaction within the jurisdiction yields exists.26 However, the reason for a corporate exit may be attraction to the "superior management" of rival jurisdictions rather than a discontent with the departure state.27 It was argued that the reason why corporations tend to flee from bigger states to Delaware is because of the constituent pressures in larger states.28 However, small states tend to be more prone to constituent pressures.

In a multiple jurisdiction system, change of domicile transactions have a disciplining effect on the states29 and put a limitation on state governments not to overregulate or levy untolerable taxes.30 Legislation adopted with rent incentives will decrease if the scope of regulatory competition increases.31 Corporate exits may also cause "satisfaction" in the remaining corporations if these exits eliminate an emergmg· oppos1t10n.· · 32

24 See Bratton & McCahery, Regulation, supra note 11 at 1883. 25 See William W. Bratton & Joseph A. McCathery, The New Economics of Jurisdictional Competition: Devolutionary Federalism in a Second-Best World, 86 Geo. L.J. 201, 264 (1997- 1998) 26 See Hirschman, State, supra note 31, at 95 (discussing tribal exits). 27 See Hirschman, State, supra note 31, at 95 (discussing tribal exits). 28 See Mark J. Roe, Delaware's Politics, 118 Harv. L. Rev. 2491, 2526 (2005). 29 See Bratton, Delaware Law, supra note 12 at 450; Allen Hyman, The Delaware Controversy - The Legal Debate, 4 Del. J. Corp. L. 368, 379 (1978-1979) 30 See Hyman, Controversy, supra note 28, at 379. 31 See Easterbrook, European, supra note 21, at 127. 32 Hirschman notes that in "stateless bands", remaining parties would be satisfied with the exit (See Albert 0. Hirschman, Exit, Voice, and the State, 31 World Pol. 90, 95 (Oct., 1978)).

10 Exit will take the form of a "cumulative exit" in a single or dominant

regulator jurisdiction.33 The U.S. federal taxation regime is one example.

Congress responded to the mass inversions of U.S. multinationals before 2002 with anti-inversion and redomestication provisions rather than substantial tax

reform.34

Exit does not solve the cause of exit in the departure state. Exit from a jurisdiction after a law eliminates the perceived benefits of the initial

incorporation and does not remedy the harm done by the legislation.35 Thus, exit

does not cure agency problems left behind.36 For instance, mandatory aspects of

corporate law are not challenged frequently in American courts because

mandatory provisions may be avoided by relocating. 37 As a result, "[a]lthough exit

can eliminate inefficient laws, it can also reduce the benefits of efficient

regulation."38 Exit produces "fission" and/or "secession" instead of

"emigration."39

Voice and exit options have an important interplay. "Competition operates through domestic public accountability and motivating legislators. Thus, exit is

33 "[I]f exit were always cumulative, with losing bands never being able to recoup their losses, a tendency toward consolidation of the many bands into one would have asserted itself." (See Hirschman, State, supra note 31, at 95). 34 See infra Part II, Subsection B. 35 See William W. Bratton, Corporate Law's Race to Nowhere in Particular, 44 U. Toronto L. J. 401, 431 (1994) 36 See Bratton & McCahery, Regulation, supra note 11 at 1883. 37 See John C. Coffee Jr., The Mandatory/Enabling Balance in Corporate Law: An Essay on the Judicial Role, 89 Colum. L. Rev. 1618, 1627 (1989); See Bebchuk, Desirable Limits, supra note 12, at 1452, 1497 (Statal objective to protect shareholders would be futile if corporations flee.) 38 See Erin A. O'Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev. 1151, 1163 (Fall, 2000) 39 See Hirschman, State, supra note 31, at 90.

11 dependent upon the voice for effectiveness."40 "[V]oice can and should complement and occasionally supersede exit as a recuperation mechanism when business firms, public services, and other organizations deteriorate."41

Sometimes, exit may not prevent the application of the law of the departure jurisdiction. For instance, although ITT corporation reincorporated in

Nevada from Delaware in order to benefit Nevada's then antitakeover statute, the

Federal District Court invalidated Nevada's antitakeover statute by applying

Delaware case law in analogy.42 Norman Veasey, the former chief justice of

Delaware, notes on this particular case that the "goal of finding corporate law more hospitable than Delaware's may prove to be elusive."43 Nevertheless, the corporation fled from Delaware to a Delaware following jurisdiction. The corporation in question could achieve its goal to avoid Delaware Jaw if the corporation fled to either a MBCA jurisdiction or a large state.

2. Change of Jurisdiction Equilibrium

A cost-benefit analysis has to be conducted in order to decide on organizational and jurisdictional changes. The outcome of an out-of-state

40 See Joel P. Trachtman, Regulato,y Competition and Regu!ato,y Jurisdiction, 3 J. Int'I Econ. L. 331, 335 fn. 10 (2000) (citations omitted). 41 See Albert 0. Hirschman, "Exit, Voice, and Loyalty": Further Reflections and a Survey of Recent Contributions, 1 Soc Sci. Inf. 7 (1974) reprinted in 58 Milbank Memorial Fund Q. Health & Soc. 430, 431 (Summer, 1980). 42 E. Norman Veasey, An Economic Rationale for Judicial Decisionmaking in Corporate Law, 1 Del. L. Rev. 169, 169 fn. 5 (1998); reprinted at 53 Bus. Law. 681 (1998). (citing Nevada. Hilton Hotels, Inc. v. !TT Corp., 978 F. Supp. 1342, 1346 (D. Nev. 1997) and NEV. REV. STAT. ANN.§ 78.138 (West 1998)). 43 See Veasey, Rationale, supra note 41, at 169 fn. 12 or 53 Bus. Law 683 fn 12.

12 migration decision will depend upon a cost-benefits analysis made by the corporate management.44 Rational corporations will not change their legal domicile unless it is beneficial to them.45 Once a corporation has made its initial location decision, states will be unable to impose additional costs on corporations greater than the benefits their legal regimes provide plus the cost of relocation.46

Thus, the Delaware corporate bar's rent extraction will not exceed the point where

Delaware firms would be made worse off than outbound migration.47

Relocation to a more liberal legal regime produces comparative advantage over the firms staying in stricter regimes. Thus, firms are not indifferent to favorable terms granted to their rivals in the same industry. This fact alone leads to liberaiization in corporate laws.48 Relocation decisions presumptively bring

"pareto improvements" to the former equilibrium.49 Corporate constituents, i.e. shareholders, make their own analysis regarding jurisdictional changes.

44 See Jeffrey N. Gordon, Corporations, Markets, and Courts, 91 Colum. L. Rev. 1931, 1963 (Dec., 1991) ("In the case of the ongoing corporation, the credibi Iity of management's threat is a decreasing function of the managers' forgone benefits in vetoing a Delaware reincorporation"); Daines, Choice, supra note 15, at 1577 (arguing that migrating or staying depends upon the total value of the staying at the home state). 45 See Henry N. Butler, Nineteenth-Century Jurisdictional Competition in the Granting of Corporate Privileges, 14 J. Legal Stud. 129, 163 (Jan., 1985); Heron & Lewellen, Reincorporation, supra note 13, at 558 (noting that firms need not to change their jurisdiction if their home state already grants at least equal rights that corporate havens offer); Romano, Product, supra note 3, at 230 (noting that managers would stay in jurisdictions having the best total "legal package"); Symposium: Association of American Law Schools: Private Parties As Defendants In Civil Rights Litigation: Michal Barzuza, Price Considerations in the Market for Corporate Law, 26 Cardozo L. Rev. 127 (November, 2004). 46 See Gordon, Corporations, supra note 43, at 1958-959. 47 See Romano, Genius, supra note 17, at 30. 48 See Butler, 19th Century, supra note 44, at 141. 49 See Elliott J. Weiss & Lawrence J. White, Of Econometrics and Indeterminacy: A Study of Investors' Reactions to "Changes" in Corporate Law, 75 CAL. L. REV. 551, 603 fn. 216 (1987)

13 Shareholders are expected to approve the change of domicile proposals brought by management if they are not made worse off with the movement.so

Differences in the legal formulations of state laws do not matter unless there is a material divergence in the implication of the norms. "Conceptual differences conceal functional similarities." Consumers of law may be indifferent to legal formulations so long as their desired outcome is effectuated.s 1 Short term benefits analysis is also not sufficient to ass~ss whether the firm should stay or leave. The equilibrium reached in the relocated jurisdiction may change after the effectuation of relocation. Therefore, the firm should be forced to shift between jurisdictions. This risk is also impounded in the reincorporation equilibrium.

Network effects theory asserts that Delaware's strength in the charter market is a result of the volume of corporations incorporated within Delaware.

The more corporations incorporate in Delaware, the more jurisprudence is produced. The more jurisprudence is produced, the more corporations incorporate or relocate to Delaware. Hence, network effects theory predicts that the existence of a rival state having a superior legal regime will diminish the appreciation of

Delaware jurisprudence and the legal services the Delaware bar produces.s2

Challenge by a rival state with a superior legal product is impossible according to the inherent logic of the network effects theory. The rival state will attract a sufficient volume of incorporations before producing a superior legal product.

50 See Gordon, Corporations, supra note 43, at 1963. 51 See Ogus, Competition, supra note 233, at 409. 52 See Michael Klausner, Corporations, Corporate Law, and Networks of Contracts, 81 Va. L. Rev. 757 , 851 (1995) ("Widespread reincorporation, even to a state with inherently superior law, would reduce the value of the existing stock of Delaware case law and Delaware-specific legal forms, legal opinions, and legal expertise.").

14 Therefore, it is in Delaware's best interest to prevent outbound migration while not scaring corporations to incorporate or relocate to Delaware. Factors other than network effects also fortify Delaware's market share in the charter market.

Relocation procedures and approval requirements are time consuming. Doubts regarding target jurisdiction coupled with the time required to consummate a relocation strengthens Delaware's market share in the charter market even if

Delaware faces actual competition from a superior product.s3

Commentators note that if Delaware constantly injures management and investment communities then they may take their corporation away from

Delaware.s4 In contrast, Delaware does not have the ability to harm corporate managers constantly. The total costs of the leaving Delaware far exceed lobbying before the Delaware State Bar Association's corporate law committee. Therefore, managers tend to stay in Delaware. In addition to the bar, Delaware state's officials will respond to companies leaving Delaware.ss

3. Regulatory Arbitrage

There would be no relocation if all the corporate law regimes were identical. Exploration, discovery, comparison and exploitation of more fit laws produce high legal costs when diverse legal systems are available. However, many

53 See Klausner, Networks of Contracts, supra note 51, at 850. 54 See Roe, Delaware's Politics, supra note 27, at 2502. 55 See Kahan & Karnar, Price Discrimination, supra note 5, at 1244.

15 firms are large enough to tolerate browsing costs for more suitable laws.56 Their

size renders them more attentive to legal regimes. 57 Therefore, they will respond

to changes in the legal system of their home and other jurisdictions. Relocations

are triggered by changes in corporate law regimes of either the home or target

58 jurisdictions. As a result, relocation, whether it be through reincorporation,

domestication or conversion, can be defined as a correction of the charter market

when the legal balance is upset.

An update to the legal system of one jurisdiction may be copied by

another. The diffusion of legal rules creates equilibrium.59 Procedural distinctions

among state legislative processes cause a gradual diffusion that ensures a

heterogeneous structure of state corporation laws. 60 Relocations decrease while

corporate law diffusion increases. 61 It is commonsense that regulatory arbitrage

can only be utilized ifthere is a regulatory discrepancy. Therefore, the only period

when a state legal update will attract incorporations is until the diffusion of the

legal innovation among states is completed.62 Consequently, innovative States are

56 See Larry E. Ribstein & Bruce H. Kobayashi, An Economic Analysis of Uniform State Laws, 25 J Legal Stud 131, 180 ( 1996); Bebchuk, Desirable Limits, supra note 12, at 1480 (noting that initial promoters would not seek for the most efficient legal system if they lack the resources to discover such system). 57 See Romano, Product, supra note 3, at 226, 258, 279. Survey made in 1985 found that relocating firms gave importance to the discrepancy between legal regimes. (See Id., at 259.) 58 See Dodd & Leftwich, supra note 14, at 267. Marginal differences between state corporate codes may deter reincorporation if lawyers can not compare the price of these divergences (See Ayres, Supply-Side Inefficiencies, supra note 11 at 559). 59 See Romano, Product, supra note 3, at 233-9 (evaluating the diffusion process of the 1967 amendments of Delaware law); William J. Carney, The Production of Corporate Law, 71 S. Cal. L. Rev. 715, 731-36 (May, 1998) (discussing the diffusion process of the MBCA and the antitakeover statutes). 60 See Carney, Production, supra note 58, at 734 (citing Romano, Product, supra note 3, at 225). 61 See Romano, Product, supra note 3, at 254. 62 See Susan Rose-Ackerman, Risk Taking and Reelection: Does Federalism Promote Innovation?, 9 J. Legal Stud. 593, 611 (1980) (discussing the political election process).

16 likely to take measures in order to prevent duplication of the innovation in order to extend the period of inbound migration63 that causes repeated update of state laws. In particular, Delaware has an incentive to update its statute frequently in order to "differentiate" itself because its innovations are not legally protected. 64

Corporations do not respond to minor amendments of the law because of relocation costs. Historical accounts prove that mass relocations occur because of major amendments affecting corporations. The great corporate exodus from New

Jersey to Delaware took place after New Jersey adopted harsh antitrust laws in

1913.65 The reincorporation rate gradually lost its momentum after this massive shifting. Thereafter, the average reincorporation in Delaware was only one NYSE listed corporation in the 1928-1966 period. 66 The second migration wave into

Delaware happened because of the Delaware Code amendments of 1967.67

Delaware substantially reformed its law in 1967 in order to accelerate its declining incorporation rate. 68 As a result, Delaware incorporations reached a record after this liberalization.69 After this leap, the relocation frequency increased to an

63 See Ibid. (discussing the political election process). 64 See Ayres, Supply-Side Inefficiencies, supra note 11 at 559 ("Delaware may have an incentive to differentiate its product for the sake of differentiation itself.". 65 Christopher Grandy, New Jersey Corporate Chartermongering, 1875-1929, 49 J. Econ. Hist. 677, 689 (1989) (citing New Jersey Session Lazys, Feb. 19, 1913, chaps. 13-19, pp. 25-33) (discussing the development and the demise of the New Jersey corporate haven). 66 See Dodd & Leftwich, supra note 14, at 266. Between one and three NYSE listed firms (usually one) relocated in Delaware before the 1967 codification annually (See Ibid.). 67 See Ibid. (Noting migration of 10 NYSE firms in 1966, 9 NYSE firms in 1967, 22 NYSE firms in 1968 and 19 firms in 1969 into Delaware). 68 William L. Cary, Cases and Materials on Corporations, Mineola, N.Y.: Foundation Press (1969) at 13. 69 See Comment: Harry M. First, Law for Sale: A Study of the Delaware Corporation Law of 1967, 117 U. PA. L. REV. 861, 890 (Apr., 1969) (quoting from New York Times); Dodd & Leftwich, supra note 14, at 267-68 (noting that Most of the relocation movement by the NYSE firms into Delaware occured after the 1967 Delaware amendments).

17 average of 5 firms in 1970-1977.70 Wide dissemination of Delaware's amendments to other states coupled with the slow down in Delaware legislative activities caused relocations to Delaware to decelerate.71 Mass corporate relocations did not occur until after the 1986 amendment of the DGCL limiting director liability. 72 The third flux of relocations into Delaware occured after

Delaware's affirmation of the validity of poison pills and discriminatory stock purchases.73

Companies may migrate because of the comparative disadvantages they are exposed to in the absence of legal changes. Stricter regimes impose more costs upon companies domiciled within them. Incorporation in a stricter legal regime causes a natural disadvantage against the firms incorporated in more liberal regimes. Thus, firms would not choose to be put at a disadvantage with their rivals in the same industry. Scholars observed in 1914 that firms with leverage pushed

State corporate law drafting committees not to be put at a disadvantage with their

70 See Dodd & Leftwich for distribution of NYSE firms' domestication into Delaware, supra note X, at 266 (Noting migration of 10 NYSE firms in 1966, 9 NYSE firms in 1967, 22 NYSE firms in 1968 and 19 firms in 1969 into Delaware). 71 See Romano, Product, supra note 3, at 244. 72 See Heron & Lewellen, Reincorporation, supra note 13, at 552. 73 See Heron & Lewellen, Reincorporation, supra note 13, at 551; Moran v. Household International, Inc., 500 A.2d 1346 (Del.1985).

18 rivals, and they usually threatened exit. 74 Corporations can exit unilaterally and migrate to another jurisdiction if the desired law can not be obtained.75

4. Transactional Migration

Corporations relocate even in the absence of changes in the state corporate law equilibrium. Usually, corporations change their jurisdiction in anticipation of specific major transactions contemplated to be undertaken.76 Relocation decisions coincide with significant corporate changes such as "investment, production, and financing activities."77 Studies on the wealth effects of reincorporations found that reincorporating firms are in good financial condition and relocation is not effectuated for "financial salvation."78 Reincorporating corporations are the firms in transition.79 It was reported that 45% of corporations engaged in jurisdictional change before their IP0.80 Most corporations migrated in the absence of legal amendments in order to engage an IPO, M&A transaction, for antitakeover

74 See Raymond T. Zillmer, State Laws: Survival of the Unfit, 62 U. Pa. L. Rev. 509, 521 (1913- 1914). See also SYMPOSIUM: ONE HUNDRED YEARS OF UNIFORM STATE LAWS: Alfred F. Conard, The European Alternative to Uniformity in Corporation Laws, 89 Mich. L. Rev. 2150, 2161 (1991) (noting that "When German industrialists found themselves exposed to competition from potentially less regulated Luxembourg rivals, they might conceivably have wanted the right to enjoy Luxembourg laxity by moving their corporate headquarters to Luxembourg. There is no evidence, however, that the captains of European industry perceived a "race of laxity" as advantageous to them"). 75 See Bratton & McCahery, Regulation, supra note 11 at 1887. 76 See See Romano, Product, supra note 3, at 250, 272-73; Charny, Competition Among Jurisdictions, supra note 108, at 433 (agreeing with Romano). 77 See Dodd & Leftwich, supra note 14, at 281. 78 See Heron & Lewellen, Reincorporation, supra note 13, at 565. 79 See Heron & Lewellen, Reincorporation, supra note 13, at 566. 80 See Heron & Lewellen, Reincorporation, supra note 13, at 566.

19 purposes, or a combination thereof.81 Market oriented scholars assert that the purpose of transactional relocation is to save costs associated with these transactions.82 Corporations may only afford to relocate to the pre-transaction period as the costs associated with relocation are high. 83 The structure of

Delaware corporations supports the transactional relocation theory. These firms are larger, more leveraged, and tend to participate more frequently in takeovers support the transactional migration idea.84 The fact that spun-off firms have a tendency to incorporate in Delaware corresponds to the theory that companies move to Delaware when their possible transactions may trigger a judicial fiduciary duties check. 85

Transactional migration analysis offer Delaware's predictability as the primary reason for relocation. According to them, relocating corporations seek cost reduction and a guarantee that states will not impair the desirability of its code.86 Corporate management incorporates in jurisdictions where costs related to financing, production and investment are minimized.87 Management makes incorporation decisions utilizing the cost-benefit analysis used to determine strategic decisions such as plant location. 88 Proponents of the cost-saving hypothesis classify the costs savings produced by the relocation into two

81 See Romano, Product, supra note 3, at 226, 250, 271, 279; Romano, Genius of Corporate Law, supra note 17, at 33; Gordon, Corporations, supra note 43, at 1963 (noting that corporations generally migrate to Delaware for IPO or M&A purposes). 82 See Dodd & Leftwich, supra note 14, at 281. 83 See Romano, Product, supra note 3, at 279. 84 See Daines, Choice, supra note 15, at 1591. 85 See Daines, Choice, supra note 15, at 1597 (Study on 6,671 IPOs between 1978 and 2000). 86 See Romano, Genius of Corporate Law, supra note 17, at 32. 87 See Dodd & Leftwich, supra note 14, at 259. 88 See Dodd & Leftwich, supra note 14, at 260. 20 categories. Primary savings come from the reduction of costs in the target jurisdiction,89 and auxiliary savings come from improvement in legal predictability.90 However, the dominant view in academia is that Delaware law is quite unpredictable.91

The causes of jurisdiction changes create litigation risks. The market oriented theory assert that "firms move to Delaware when the legal regime it provides is likely to be more important, i.e. when it undertakes a transaction that increases the likelihood of legal entanglements".92 According to them, the predictability of Delaware case law and the experienced judiciary relieves litigation risks.93 Relocating firms prefer Delaware in order to reduce costs related disputes such as IPO Iitigation94 or minority shareholder Iitigation.95 In fact, these corporations do not move into jurisdictions where a security bond requirement in order to initiate litigation is absent. If firms desired to be relieved from litigation, then it would be more rational to move to jurisdictions which are not litigation friendly. Delaware has many litigation friendly procedural rules which may be unsympathetic to companies expecting litigation.96 From the business standpoint

89 See Romano, Product, supra note 3, at 249, 264-5. 90 See Romano, Product, supra note 3, at 249, 264. 91 See Ehud Kamar, Shareholder Litigation Under Indeterminate Corporate Law, 66 U. Chi. L. Rev. 887 (1999) (discussing the role of Delaware's indeterminateness in the charter market). 92 See Romano, Product, supra note 3, at 225 93 See Romano, Genius of Corporate Law, supra note 17, at 33-34, 39 n. 20. Commentators note that settled precedents of Delaware increase the attractiveness of a jurisdiction (See Romano, Product, supra note 3, at 278). 94 See Romano, Product, supra note 3, at 250 (noting that IPO increases the likelihood of litigation. Availability of legal opinions and precedents in Delaware reduces the amount of expenses.). 95 See Romano, Product, supra note 3, at 249. 96 There is not dispute over Delaware's litigation friendliness. Many scholars note that Delaware judiciary is the primary asset and litigation friendly rules are corollary products (See Bratton & McCahery, Regulation, supra note 11 at 1899).

21 of managers, migration to less litigation friendly jurisdictions is more desirable. In contrast, migration into Delaware generates legal fees and a future income stream to attorneys.

Relocated firms do not leave Delaware after relocation. Market oriented scholars assert that these transactions create a "reciprocal dependence" among

Delaware and the staying corporations."97 Furthermore, lawyers who have already built expertise on Delaware case law recommend their corporate clients migrate to

Delaware. Corporations also try to minimize their costs so they tend to stay in

Delaware.98 The actual reason why migrated firms tend to stay in Delaware may not surpass speculation because firms are not obligated to report to the SEC why they stay m Delaware after the expected "legal entanglements" causing the relocation m Delaware had passed. High costs associated with relocation may explain post-transactional stay in the destination jurisdiction.

4. Agency Problems

Selection of the legal institution produces agency costs.99 Managerial self- interest is likely to prefer more flexible regulatory regimes, 100 entrench their

97 See Romano, Genius of Corporate Law, supra note 17, at 43-44. 98 See Romano, Genius of Corporate Law, supra note 17, at 43-44. 99 Whether the managers prefer pro-managerial jurisdictions or pro-shareholder jurisdictions debate is an ancillary discussion of the whether there is a race to the top or bottom among states on corporate law. Discussion of both controversies exceeds the limits of this work. 100 See Camey, Role of Competition, supra note 21, at 615. 22 offices, restrict their liability through the corporate code, 101 prevent control

seekers102 and block shareholder access to reincorporation decisions. 103 Agency

problems prevent corporate managers from selecting pro-shareholder jurisdictions

as the site of incorporation. 104 Managers would not approve a relocation decision

decreasing managerial autonomy even if it increases shareholder value. 105

·Relocation decisions are initiated by corporate managers and the approval of this

decision is subject to shareholder approval. Shareholder approval of the relocation

decision is not an effective monitoring device because of shareholder apathy.

Consequently, studies evince that relocations are from pro-shareholder

jurisdictions to pro-managerial jurisdictions. 106

However, managers are not totally independent m the selection of

corporate domicile. Opportunistic managerial reincorporation proposals may face

shareholders resistance. 107 Managers may not select jurisdictions exposing

101 See Romano, Takeover Statutes, supra note X, at 111; William .I. Carney, The Political Economy of Competition.for Corporate Charters, 26 .I. Legal Stud. 303, 306 (Jan., 1997). 102 See Romano, Takeover Statutes, supra note X, at 111. 103 See Bratton & McCahery, Regulation, supra note 11 at 1887. 104 See Bratton & McCahery, Regulation, supra note 11 at 1884. 105 See Bernard Black & Reinier Kraakman, A Self-Enforcing Model of Corporate Law, 109 Harv. L. Rev. 1911, 1975 (Jun., 1996) 106 See Guhan Subramanian, The Influence of Antitakeover Statutes on Incorporation Choice: Evidence on the "Race" Debate and Antitakeover Overreaching, 150 U. Pa. L. Rev. 1795, 1820-22 fn.100 (2002) (accounting that approximately 40% of the IPO firms' relocations were conducted by California headquartered corporations into Delaware). Delaware attract firms with managers having weak preference for pro-managerial rules from states with pro-managerial rules (See Barzuza, Price Considerations, supra note 44, at 132). An interesting theory suggests that "the more pro-managerial its law is, the more managers it attracts but the less it can charge each firm" (See Barzuza, Price Considerations, supra note 44, at 132). If it was true, then Delaware had to charge higher when it shifted to a pro-shareholder policy during the 1980s. Moreover, pro- shareholder jurisdictions', i.e. California, total "price" should be higher than Delaware. 107 See Bratton, Nowhere, supra note 34, at 424.

23 shareholders additional costs.108 Managers hesitate to relocate to jurisdictions

which apparently harm shareholder value as shareholder interest must be

catered. 109

5. Migrating Corporations' Structure

The structure of the corporation plays an important role in the selection of

jurisdiction. Empirical studies found that Delaware supplies the corporate law

needs of large public corporations while other jurisdictions accommodate closely

held small firms. 110 Although opponents of this facet of the charter market

discredit this theory as "incomplete," 111 they affirm this theory by recognizing that

108 See Weiss & White, Reactions, supra note 48, at 603 fn. 216 ("There may be, as Cary suggests, a manager-dominated "market for corporate law" in which managers choose what state's law will govern their firm, subject to the constraint, suggested by Winter, that managers cannot choose a state whose corporate law imposes net costs on shareholders."). 109 See Black & Kraakman, Self Enforcing, supra note 104, at 1975. Commentators suggested that managers may entice shareholders by a concurrent dividend distribution in order to get their approval for Delaware reincorporation. Studies could not encounter an instance of this practice in reincorporations of NYSE firms in 1968-1976 period (See Hyman, Controversy, supra note 28, at 387). Commentators note that one source of corporate migration may be a possible "lemons" problem. Corporations possessing over-the-average-integrity will shift to other jurisdictions if shareholders are not competent enough to collect data over the multiple corporate law regimes (See David Charny, Competition among Jurisdictions in Formulating Corporate Law Rules: An American Perspective on the "Race to the Bottom" in the European Communities, 32 HARV. INT'L. L.J. 423, 437 (1991)). 110 Richard A. Posner & Kenneth E. Scott, Economics of Corporation Law and Securities Regulation 111 (1980). See also Daines, Choice, supra note 15, at 1591 (noting that Delaware corporations are larger). 111 See Romano, Product, supra note 3, at 238 (noting that Posner-Scott theory as "incomplete" in explaining the charter market dynamics). Prof. Romano acknowledges that her concentration ratio data is "imprecise" probably because of the 13G filings (See Romano, Product, supra note 3, at 262).

24 corporations domiciled in Delaware are large enough to be indifferent to additional state taxation costs. 112

The Baysinger-Butler study affirmed the fact that incorporation decisions are a result of the ownership structure of corporations. 113 Control block corporations are not concerned with the legal regime. Therefore, they don't need to relocate to Delaware. 114 Corporations with concentrated ownership and residual claimants will stay in jurisdictions having strictly prescribed corporate laws. 115

Corporations with higher than average and average concentration ratios tend to incorporate in and move to strict jurisdictions.116 In the other hand, corporations with dispersed ownership move to Delaware. 117 In fact, the average Delaware corporation is larger and more leveraged than other states. 118 Moreover, Delaware firms mount more antitakeover defenses than other states. 119

6. State Predation

112 Studies found that relocations for tax purposes are insignificant. (See Romano, Product, supra note 3, at 255) 113 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 191. 114 See Romano, Genius of Corporate Law, supra note 17, at 45-47. 115 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 183-85. 116 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 189-190. 117 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 183-84, 189. 118 See Daines, Choice, supra note 15, at 1591. 119 Delaware corporations have more antitakeover defenses and classified boards than other states (See Coates, supra note 157, at 1366 (study over randomly selected IPOs of 180 firms which consummated their commitments in the 1991-1992 period)).

25 State predation is another ground for relocation. Relocation is a powerful

"ex post device" to enforce the bargain with the legislature of the state. 120 Adam

Smith observed that individuals may avoid excessive taxation by leaving the country, by simply "removing his stock". 121 James Steuart set forth that the accumulation of private wealth neutralizes governmental "grasp when he attempts to seize it" and counterbalances state predation. 122 However, actual exits from one jurisdiction do not cure the reasons of exit. Capital's ability to flee away may impair economic reforms. 123 Thus, relocation protects the firm from state predation but it does not eliminate state predation completely.

7. Tax Savings

Corporations may relocate with the purpose of franchise tax savings.

Delaware is the only state generating revenue from franchise taxes124 as no other state has committed itself to compete with Delaware. 125 Therefore, Delaware charges the highest rate of franchise taxes. Some corporations are indifferent to this level of state taxation. 126 Nevertheless, some corporations are sensitive to

120 See Bratton & McCahery, Regulation, supra note 11 at 1887. 121 See Hirschman, State, supra note 31, at 99 (quoting from Adam Smith, The Wealth of Nations, Modern Library ed., 800) 122 See Hirschman, State, supra note 31, at 98-99 (quoting from James Steuart, Inquiry into the Principles of Political Oeconomy (1767)). 123 See Hirschman, State, supra note 31, at 100 (noting that capital flight impairs "the capability of capitalism to reform itself'). 124 See Kahan & Kamar, Price Discrimination, supra note 5, at X; See Kahan & Kamar, Myth of Competition, supra note 149, at Y; Bebchuk, Bar-Gill & Barzuza, The Market, supra note X, at 148. 125 See Kahan & Kamar, Price Discrimination, supra note 5, at 1205. 126 Studies found that relocations for tax purposes are insignificant. (See Romano, Product, supra note 3, at 255) 26 franchise tax levels and indifferent to the benefits of Delaware incorporation, which encompasses Delaware's judiciary and its stock of Delaware. 127 These corporations sort the jurisdictions according to their tax burdens. Naturally, tax relocations will occur from high tax jurisdictions to low tax jurisdictions. Thus, relocations with the purposes of tax savings will especially be observed in migrations out of Delaware.128 For instance, several Michigan firms reincorporated in Delaware returned to their home for tax savings. 129 These corporations returned to Michigan after Michigan copied Delaware law on the relevant issue. 130

Corporations may convert to shield themselves from the federal taxation regime. Corporations are imposed with double taxation. Successful corporations may desire to convert to unincorporated entities or shift income to lower taxed tax bases if tax distortion rises. 131 The reason for conversion from corporations to unincorporated entities coupled with spin-offs may be income shifting to unincorporated entities. Corporations are better off by directing taxable income to

lower taxed tax bases while still holding capital. 132

127 See Romano, Product, supra note 3, at 235. 128 See Demetrios G. Kaouris, Is Delaware Stil! a Haven/or Incorporation?, 20 Del. J. Corp. L. 965, 100 I ( 1995) (citing proxy materials stating the cause of out of Delaware reincorporation is tax savings). Generally, incorporation related fees out of Delaware are negligible (See Mark J. Loewenstein, Delaware as Demon: Twenty-Five Years After Professor Cary's Polemic, 71 U. Colo. L. Rev. 497, 506 (2000)). 129 See Romano, Product, supra note 3, at 235 fn. 12. 130 See Romano, Product, supra note 3, at p. 235 n. 12, 244 n. 34, 258 (noting that "Michigan adopted substantially all of Delaware's provisions. The incentive to pay additional franchise taxes in order to possess a Delaware domicile had therefore been significantly reduced by the time the state tax package was changed"). 131 See Jeffrey K. Mackie-Mason & Roger H. Gordon, How Much Do Taxes Discourage Incorporation?, 52 J. Fin. 477, 478, 504 (1997) 132 See Mackie-Mason & Gordon, Taxes, supra note 130, at 500.

27 8. Efficient Corporate Law

The contractarian school of thought asserts that same motives which drive enterprises to select optimum contractual provisions drive the corporations to select an efficient corporate law system. 133 Thus, managers choose state corporation codes in order to signal to the market the value of the corporate contract. 134 However, opponents indicate that contractarians do not provide with a single case of relocation for efficiency. 135 The debate over the relocation for efficient law is dependent upon the role of states on the corporate law controversy and exceeds the boundaries of this subsection.

9. Takeover Protection

Corporate managers consider the availability of antitakeover protections in their jurisdictional selections. 136 Companies may control the shareholders' capacity to "oust an incumbent board" and its "exposure to takeover market" by selectively incorporating in protective jurisdictions. 137 Antitakeover statutes fortify managerial entrenchment while denying the shareholders pecuniary

133 See Klausner, Networks of Contracts, supra note 51, at 771. 134 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 180. 135 See Loewenstein, Polemic, supra note 127, at 531. 136 See Daines, Choice, supra note 15, at 1597 (finding that state antitakeover statutes are insignificant to reason for f PO stage incorporations; however f PO stage corporations choose Delaware because of the availability poison pill or control share statutes.) (Study on 6,671 IPOs between 1978 and 2000); Guhan Subramanian, The Influence of Antitakeover Statutes on Incorporation Choice: Evidence on the "Race" Debate and Antitakeover Overreaching, 150 U. Pa. L. Rev. 1795, 1824-65 (2002) (Managers react to the adoption of the antitakeover statutes in their selection of jurisdictions). 137 See Robert Daines & Michael Klausner, Do !PO Charters Maximize Firm Value? Antitakeover Provisions in IPOs, 2001 J: Law Econ. & Org. 17, 87 (2001)

28 benefits of control. Wealth reducing effects of the antitakeover statutes on the part of the shareholders are well documented. 138

States responded to the takeover wave of the late 1970s by passing antitakeover statutes ("ATS") in order to protect in-state labor and managerial interest groups. A TS states adopted such legislation to protect of large employers incorporated in their state. 139 Protectionist antitakeover statutes are not a product of charter market competition. States adopt antitakeover statutes in order to restrict state competition140 by restricting the movement of tangible corporate assets out o f t heir · terntory. · 141

138 See Roberta Romano, The Political Economy of Takeover Statutes, 73 Va. L. Rev. 111, 122-41 (Feb., 1987) ( comparing political economy of Connecticut and Delaware on anti takeover legislation); Michael Ryngaert & Jeffry M. Netter, Shareholder Wealth Effects of the Ohio Antitakeover Law, 4 J.L. Econ. & Org. 373, 374 ( 1988) (finding that Ohio incorporated firms' share prices fell down an approximate 2% after the passage of the Ohio antitakeover legislation); Laurence Schumann, State Regulation of Takeovers and Shareholder Wealth: The Case of New York's 1985 Takeover Statutes, 19 Rand J. Econ. 557 (1988) (evaluating New York's 1985 antitakeover statutes and deduce that antitakeover statutes injure investors "ex ante"); Jo Watson Hackl & Rosa Anna Testani, Second Generation State Takeover Statutes and Shareholder Wealth: An Empirical Study, 97 Yale. L. J. 1193, 1194-5 (May, 1988) (finding negative wealth affects of the second generation state control share acquisition, fair price and shareholder demand statutes); Samuel H. Szewczyk & George P. Tsetsekos, State Intervention in the Market for Corporate Control: The Case 1

29 Delaware did not adopt the Williams Act modeled state laws which were

adopted by eleven states in 1969-1975 in order to thwart tender offers. 142 Further,

Delaware resisted demands to adopt a harsh antitakeover statute in the l 980s. 143

However, Delaware had to adopt some kind of antitakeover statute to join the herd

behavior and the corresponding constituent pressures. Delaware finally adopted a

moderate antitakeover statute in 1988. 144 The dominant academic view concludes

that Delaware's antitakeover statute is mild. 145 Market oriented commentators

drew virtue out of the mild character of the Delaware antitakeover statute. 146

Many explanations have been submitted to render Delaware's behavior

comprehensible. First and foremost, Delaware lacks an incentive to pass a swift antitakeover statute. Delaware motives are different that other states adopting

antitakeover statutes. Change of control transactions do not result in downsizing

142 See for a list of such states S. Samuel Arsht, A History of Delaware Corporation Law, I Del. J. Corp. L. I (1976). A member of Delaware corporation law committee responsible for drafting the DGCL explained it Delaware did not adopt such as statute as these statutes were pro-managerial and no in the interests of shareholders (See Id at 20). See for the Williams Act, Williams Act, Pub. L. No. 90-439, 82 Stat. 454 (1968) codified as 15 USC§ 78a et seq. (2007). 143 See Romano, Genius of Corporate Law, supra note 17, at 59-60 144 See, DEL. CODE ANN. tit. 8, § 203 (Supp. 1988). 145 See Ralph K. Winter, Jr., State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. Legal Stud. 251, 289 (1977) (conceding that Delaware antitakeover statute is mild); Frank H. Easterbrook & Daniel R. Fischel, The Economic Structure of Corporate Law (1991) at 222-3 (noting that Delaware antitakeover legislation is comparatively moderate); Gregg A. Jarrell & Annette B. Poulsen, Shark Repellents and Stock Prices: The Effects of Antitakeover Amendments since 1980, 19 J. Fin. Econ. 127, 426 (1987) (noting that Delaware ATS is a "relatively mild law"); Barzuza, Price Considerations, supra note 44, at 138 (noting that Delaware antitakeover law is not harsh); See Gordon, Corporations, supra note 43, at 1966 (noting that Delaware Supreme Comi's antitakeover policy was more stringent than the Delaware statute.) 146 See Weiss, Proposal, supra note X, at 1722 fn. 88 (noting that "Delaware law is intended to supplement rather than substitute for existing law governing takeover bids." (quoting and agreeing the synopsis of the Delaware antitakeover law repronted in 20 Sec. Reg. & L. Rep. (BNA) at 211); John S. Jahera, Jr. & William Pugh, State Takeover Legislation: The Case of Delaware, 7 J.L. Econ. & Org. 410, 411 (Autumn, 1991) (finding that Delaware antitakeover legislation did not injure shareholders).

30 in Delaware or impair state's social life. 147 Delaware did not have a large

employer base to protect unlike other states. 148 Delaware did not adopt a solid

antitakeover statute because of the "competing interest groups' pressure."

Delaware faces competing management group pressure, i.e. control seeking

managements' and the target's management. 149 Thus, Delaware's antitakeover

legislation pleased in-state management and out-of-state shareholders. 150 Another

prominent theory asserts that Delaware did not insist on adopting ATS in the

1980s because of the possible risk coming from the nation's capital threatening to

federalize corporate law. 151 The most plausible explanation recognizes a business

purpose and self-interest on Delaware's part. Delaware acted in the opposite

direction of the industry standard creating a niche in the charter market. 152

Delaware became a forum attracting M&A litigation by resisting a strong antitakeover statute. 153 Takeover activity enriches members of the Delaware

147 See Loewenstein, Polemic, supra note 127, at 523. 148 See Garfield, Takeover, supra note 139, at 580. 149 See Romano, The Need for Competition, supra note 3, at 530-37; Gordon, Corporations, supra note 43, at 1964; Romano, Genius, supra note 17, at 59-60 (noting that Delaware bar adopts a balanced approach because Delaware hosts both targets and bidders); John C. Coffee, Jr., "Comment" in , "The Most-Cited Artic!esfi·om the Yale Law Journal", (Fred R. Shapiro eds.) 100 Yale L.J. 1449, 1499 (1991) (noting that Delaware does not have the managerial and labor interest groups of the A TS states); Roberta Romano, The State Competition Debate in Corporate Law, 8 Cardozo L. Rev. 709, 730-1 (1987) (noting that Delaware could encounter the protection seeking demands because of the volume of control seeking and target corporations incorporated within Delaware). 150 See Marcel Kahan & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 Stan. L. Rev. 679, 739-40 (2002); Loewenstein, Polemic, supra note 127, at 523 (Delaware's motive is simply appeasing management). 151 See Bratton, Nowhere, supra note 34, at 422. 152 See Gordon, Corporations, supra note 43, at 1964 (Delaware was an exception to a national hype to adopt A TS); Donald E. Schwartz, Federalism and Corporate Governance, 45 Ohio St. L.J. 545, 554 fn. 73 (1984) (noting that Delaware adopted a mild antitakeover law despite the national trend); Roberta Romano, The Need for Competition in International Securities Regulation, 2 Theoretical Inq. L. 387, 407 (2001) (noting that "the state with the largest stake in the chartering business, stands out as an anomaly in the pattern of takeover legislation"). 153 See Bratton, Delaware Law, supra note 12 at 451.

31 corporate bar154 by generating legal fees. 155 Impairment of takeover activity is against the interest of the Delaware bar. 156

Corporate relocation is not necessarily required to achieve protection against takeovers. Instead of relocating to an antitakeover jurisdiction, management might direct shareholder to adopt domestic antitakeover devices.

Relocations to antitakeover jurisdictions would be redundant if corporate management already possesses such power. Managerial groups lobbied for antitakeover statutes before state legislatures because they did not possess sufficient shareholder support for similar instruments. 157 Moreover, managers may increase leverage as part of a defensive plan. Capital structure may act as a deterrent in takeovers. Many target corporations increased their debt capital in order to thwart leveraged takeovers. 158

10. Avoiding Mandatory Rules

Mandatory corporate law provisions may be avoided by corporate relocations because of the internal affairs doctrine. 159 Mandatory corporate law

154 See Gordon, Corporations, supra note 43, at 1964. 155 See Macey & Miller, Interest-Group Theory, supra note 3, at 469. 156 See Coffee, Comment, supra note 148, at 1499. 157 See Gordon, Corporations, supra note 43, at 1961-962. 158 See Elliott J. Weiss, A Proposal for a Federal Takeover Law, 9 Cardozo L. Rev. 1699, 1712 (1987-1988); John C. Coates IV, Explaining Variation in Takeover Defenses: Blame the Lawyers, 89 Cal. L. Rev. 1301, 1342 (2001) 159 See Bernard S. Black, Is Corporate Law Trivial?: A Political and Economic Analysis, 84 Nw. U. L. Rev. 542, 545, 555 (1990) (noting that mandatory corporate law rules may be avoided by incorporation choice and indicating the Pennsylvania statute allowing the corporations adopt any 32 rules have evolved into enabling clauses, i.e. unanimity requirement for mergers reduced to majority, because of the "demand side push". 160 As a result, regulatory competition will erode mandatory laws. 161 State competition led to results prohibited in another state. 162 For example, pseudo-foreign corporations solely established in corporate havens including Delaware in order render their home state regulations ineffective. 163 Thus, state level corporate law reforms are prone to fail. 164 States do not possess the ability to regulate because of the state competition. States should preserve the competitiveness of their legal system. 165

Thus, legal reforms may only be effectuated through unanimous cooperation between the states.166 This liberalization effect of the state competition

provision at their charters); Roberta Romano, Answering the Wrong Question: The Tenuous Case for Mandatory Corporate Laws, 89 Colum. L. Rev. 1599, 1600-1602 (Nov., 1989) 160 See Romano, Question, supra note 158, at 1603. 161 See, Romano, Genius of Corporate Law, supra note 17, at 91; Bebchuk, Desirable Limits, supra note 12, at 1496-97; Lucian Arye Bebchuk, The Debate on Contractual Freedom in Corporate Law, 89 Colum. L. Rev. 1395, 1414 (1989); Ian M. Ramsay, Company Law and the Economics of Federalism, 19 Fed. L. Rev. 169, 186 ( 1990). 162 Louis K. Liggett Co. v. Lee, 288 U.S. 517, 559 (U.S., 1933); Edward Q. Keasbey, New Jersey andtheGreatCorporations(pt. l), 13Harv.L.Rev.198, 199(1899). 163 See Richard W. Jennings, The Role of the States in Corporate Regulation and Investor Protection, 23 Law & Contemp. Probs. 193, 195 (1958); Richard W. Jennings, Federalization of Corporation Law: Part Way or All the Way, 31 Bus. Law. 991, 992 (1976) 164 See Donald E. Schwartz, Federal Chartering of Corporations: An Introduction, 61 Geo. L. J. 71, 74 (1972-1973) (noting that corporate reforms through state corporation laws are a "futile remedy"); Jennings, Federalization, supra note 162at 992; Zillmer, Unfit, supra note 73, at 518 (noting that states may not attempt legal reform as capital may be "driven out of the states"); Dodd & Leftwich, supra note 14, at 263 (State shareholder protection programs may be avoided with relocation). For instance, California corporate law draftsmen were aware that more protective corporate law statute would be avoided by reincorporation elsewhere (See Jennings, Federalization, supra note 162 at 994). "[I]t is perfectly useless to impose drastic limitations and requirements that will simply have the effect of driving corporations from their home state to more hospitable shores" (See Stevens, Uniform, supra note 814, at 1063 (quoting Henry Winthrop Ballantine, Questions of Policy in Drafting a Modern Cmporation Law, 19 CAL. L. REV. 465 (1931 ))). 165 See Schwartz, Federalism, supra note 151, at 557. 166 See Zillmer, Unfit, supra note 73, at 518.

33 phenomenon has been named as "Gresham's law."167 Regulatory competition's erosion effect on the corporate law had been known even in the 19th century. 168

Famous underwriters of the 19th century, i.e. Kuhn, and Loeb, did not endorse corporate common stock because the corporation could flee to more permissive jurisdictions than its original incorporation jurisdiction.169 Incorporation was one of the ways to avoid usury laws in the 19th century. 170 Relocating in order to avoid mandatory rules has certain benefits. Regulatory competition imposes restraint on governments. 171 The corporate charter market minimizes a state's power to impair corporate contracts. 172

Real seat doctrine fortifies mandatory rules. 173 Still, there is leeway for the regulatory arbitrage. German companies convert to Societas Europe companies in order to escape from the German co-determination requirements. 174

167 See Jennings, Federalization, supra note 162 at 994. 168 Adam Smith well before observed that individuals may avoid excessive taxation by leaving the country by simply "removing his stock (See Hirschman, State, supra note 31, at 99 (quoting from Adam Smith, The Wealth of Nations, Modern Library ed., 800)). 169 See John C. Coffee Jr., The Rise of Dispersed Ownership: The Roles of Law and the State in the Separation of Ownership and Control, I I I Yale L..J. 1, 28 (2001-2002) (citing Lawrence M. Friedman, A History of American Law, 446-463 (1973)). 170 See Note, Incorporation to Avoid the Usury Laws, 68 Colum. L. Rev. 1390 (Nov., 1968). State governments began to recognize inapplicability of usury laws to corporations in 1850 (See Note, Usury Laws, supra note 169, at 1391). N.Y. usury laws continued to apply to loans extended to 1 real persons on the condition to incorporate in I 9 h century (See Note, Usury Laws, supra note 169, at 1392). 171 See Easterbrook, European, supra note 21, at 126. 172 See Larry E. Ribstein, The Constitutional Conception of the Corporation, 4 Sup. Ct. Econ. Rev. 95, 117(1994-1995) 173 See Ribstein, Constitution, supra note 171 at 117, 120. 174 Fresenius Aktiengese/lschafl, 2006 SEC No-Act. LEXIS 637 (October 10, 2006) (concluding that exception to Rule 145(a)(2) is available in this case).

34 11. Herd Behavior

A group of corporations connote a community. Herd behavior can be observed in each community where the agents find mimicking other agents more beneficial than a decision-making process which might expose them liability.

Thus, herd behavior is another reason for relocation to corporate havens. 175

Corporations imitate other corporations for charter amendments. Informational

free-riding reduces the costs to the investors. 176 Delaware incorporation might

benefit firms by providing visibility to them. 177 Pro-Delaware sentiment grows among corporate executives after each reincorporation. Dormant corporations consider why they do not move to Delaware and mimic the relocating ones. 178

However, herding does not count as an efficient decision-making process. An

informed relocation decision coupled with cost-benefit analysis would yield the

optimal results.

175 The existence of herd behavior among corporate executives was documented by studies on other aspects of managerial behavior. See for example, Robert J. Shiller, Conversation, Information, and Herd Behavior, 85 Am. Econ. Rev. 181 (May, 1995); David S. Scharfstein & Jeremy C. Stein, Herd Behavior and Investment, 80 Am. Econ. Rev. 465 (Jun., 1990) (asserting that reputational concerns in the managerial labor market leads to managers imitiate other managers' behaviors); Marco Ottaviani & Peter Sorensen, Herd Behavior and Investment: Comment, 80 Am. Econ. Rev. 465 (Jun., 2000); Abhijit V. Bane1jee, A Simple Model of Herd Behavior, 107 Q. J. Econ. 797 (Aug., 1992) (asserting that herd behavior is suboptimal); Lee Nelson, Persistence and Reversal in Herd Behavior: Theory and Application to the Decision to Go Public, 15 Rev. Fin. Stud. 65 (Spring, 2002) ( elaborating that finding of herd behavior requires comprehensive techniques). 176 See Romano, Question, supra note 158, at 1612 (discussing "learning across firms" phenomenon for reincorporations). 177 See Gordon, Corporations, supra note 43, at 1963 (Delaware incorporation might signal the market corporation's "ambitions"). 178 See First, Law for Sale, supra note 68, at 893.

35 12. Home State Bias

Where state corporation laws are similar, corporations would incorporate

in the jurisdiction where their tangible assets are located. 179 Commonly,

companies incorporated in their home states prior to the internal affairs

doctrine. 180 In this period, corporations incorporated in the state they functioned because of underdeveloped technology, logistics 181 and communications.

TABLE 1: THE DISTRIBUTION OF CORPORA TE LAW IN THE U.S.

Color Codes

Dark Blue: MBCA (1984) Red: DGCL

Light Blue: MBCA (1969) Orange: Self Sufficient States

179 See Zillmer, Unfit, supra note 73, at 513 (noting in 1914 that "If the laws were similar, one would incorporate in the State of physical domicile"). 180 See Frederick Tung, Origins of the Internal Affairs Doctrine, Loy. L.A. Legal Studies Research Paper Series, Research Paper No. 2005-8, at 3, 23 (March 2005), available at (last visited May 17, 2007); E. Merrick Dodd, American Business Corporations until 1860 151 (1954) (citing 2 Frederick J. Stimson, American Statute Law I ( 1892))). 181 See Kamar, Incorporations, supra note 5, at 1766 (citing Edwin Merrick Dodd, AMERICAN BUSINESS CORPORATIONS UNTIL 1860 WITH SPECIAL REFERENCE TO MASSACHUSETTS 179, 400 n.29 (1954)).

36 Theoretically, a corporation may make jurisdictional choices among the

fifty states and D.C. However, there are only six available jurisdictional choices

for corporations because there is no novel competitive entry in the charter market

by rival states.182 The first choice is Delaware law. Three states and a U.S.

territory have adopted replicas of the DGCL. 183 Moreover, Delaware jurisprudence diffuses to the other states. Thus, Delaware decisions affect the

entire market rather than a constrained compartment.184 The second choice is the

MBCA. Twenty-four states use the current MBCA and eight states use the 1969 version of the MBCA. 185 MBCA provisions are much more widespread than the

official MBCA jurisdictions. Prominent studies have found that 142 key provisions of the MBCA are employed by approximately thirty-seven states. 186

There is no substantial need to move within MBCA states because only opposite magnets attract each other. Corporate law of heavily regulated states (New York and California) constitutes the third choice. The remaining options do not bear

182 See Mark J. Roe, Delaware's Competition, 117 Harv. L. Rev. 588, 638 (2003) (arguing that competition in the chaiier market is non-existent). 183 See Harry J. Haynsworth, The Unified Business Organizations Code: The Next Generation, 29 Del. J. Corp. L. 83, 87 fn. 32 (2004); Michael P. Dooley & Michael D. Goldman, Some Comparisons between the Model Business Corporation Act and the Delaware General Corporation Law, 56 Bus. Law. 737, 738 (2000-2001) (noting that Kansas, Oklahoma, Nevada, and Puerto Rico follow Delaware). 184 See John C. Coffee, Jr., The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards, 8 Cardozo L. Rev. 759, 768 (1987). 185 See Michael P. Dooley, Two Models ojCorporate Governance, 47 Bus. Law. 461 (1991-1992) (citing MODEL Bus. CORP. ACT ANN., at xxvii (3d ed. & 1998/99 Supp.). Alabama, Arizona, Arkansas, Connecticut, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kentucky, Maine, Massachusetts, Mississippi, Montana, Nebraska, New Hampshire, North Carolina, Oregon, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming adopted the 1984 version. Alaska, the District of Columbia, New Mexico and South Dakota adopted the 1969 version (MODEL Bus. CORP. ACT ANN. at XIX (ABA Publishing, 4th Ed.; 2006)). 186 See Carney, Production, supra note 58, at 718.

37 distinctive features on corporate law. The fourth choice is the business seat of the corporation, which may be a MBCA or Delaware jurisdiction. The fifth choice is the rest of the states' corporate laws. The last choice is conversion of the corporation into an unincorporated entity. In short, the more homogenous corporate law is, the fewer choices are available to corporations. Thus, there is no need for a choice of law rule either the real seat doctrine or the internal affairs doctrine when corporate laws are homogenous.

Later studies evince the so-called "home state bias". 187 A 1995 study reported that roughly 80% of the listed companies withdrawing from Delaware preferred their home state for relocation. 188 Later studies conducted in 2002 found that almost 95% of IPO firms either incorporated in Delaware or in their home state. 189 Thus, there is a two way flux between the home state of incorporation and

Delaware. 190 Studies report that North East seaboard corporations191 and

187 Home bias is a term used in the finance literature to describe investor preference towards his/her own country's securities (See Lee Pinkowitz, Rene M. Stulz & Rohan Williamson, Corporate Governance and the Home Bias, 38 J. Fin. & Quant. Anal. 87 (Mar., 2003) (analyzing home bias in the international securities market)). 188 See Kaouris, supra note 127, at 1000 (noting that "[a]nother interesting finding in the survey was that eighty percent of the corporations leaving Delaware reincorporated in the state of their principal place of business). 189 See Daines, Choice, supra note 15, at 1573 (defines home state jurisdiction "as the location of the firm's executive offices"). Delaware's market share is approximately 97% if the calculation is made on the IPO companies' assets (See Daines, Choice, supra note 15, at 1562, 1573) 190 See Kaouris, supra note 127, at 1000-1001 (noting that "[t]his [home state bias] indicates that for most of the firms leaving Delaware and for most of the firms which are leaving a state other than Delaware and not reincorporating in Delaware, the principal place of business is the most likely state ofreincorporation" [in brackets addedj); Palmiter, Corporations, supra note 734, at 39 ("The decision often comes down to a choice between the business's home state and Delaware"); Daines, Choice, supra note 15, at 1574 (noting that "the gravitational pull of a firm's home state is so strong that only about 5% of all firms that incorporate outside of Delaware make it anywhere else"); Lucian Arye Bebchuk & Assaf Hamdani, Vigorous Race or Leisurely Walk: Reconsidering the Competition over Corporate Charters, 112 Yale L.J. 553, 556 (2002) (noting that demonstrated economic pattern indicates that public companies either stay at home or domesticate into Delaware). 191 See Data source: Lucian Bebchuk & Alma Cohen, Firms' Decisions Where to Incorporate, 46 J.L. & Econ. 383, et seq., Tb. 9(2003).

38 California corporations engaging in IPOs 192 are likely to migrate from their home state to Delaware. Firms migrating to Delaware constitute only 4% of Delaware's corporate base. 193 MBCA states have a higher retention rate than non-MBCA states. Thus, Delaware increased its market share in the charter market to the detriment of non-MBCA states. 194 The high MBCA retention rate casts doubt on the captivity theory that suggests franchise tax revenues produce the most efficient and responsive laws. 195 Prof. Daines, who conducted an extensive study on the home state bias, stated that he could not econometrically decipher whether firms stay in MBCA jurisdictions because of network effects emanating from volume of incorporations, availability of commentary, or substantive MBCA rules. 196

Commentators indicate that the existence of a home state bias attests the demise of the "Tieboutian competition model." According to them, there is no nationwide market in the U.S. because firms shift between Delaware and their headquarter state. 197 However, the secondary charter market is still nationwide, but the available products are narrow because of the scarcity of the products. The most important inference drawn from the home state bias is its impact on the efficient charter market theory. The notion that the corporation's domicile

192 See Subramanian, Incorporation Choice, supra note 2, at 1820-22 fn.100 (accounting that approximately 40% of the IPO firms' relocations were conducted by California headquartered corporations into Delaware). 193 See Daines, Value, supra note 18, at 553. 194 See Daines, Choice, supra note 15, at 1591, 1596. 195 See for the captivity theory Romano, Product, supra note 3, at 236. 196 See Daines, Choice, supra note 15, at 1596. 197 See Daines, Choice, supra note 15, at 1600 (noting that "l [Prof. Daines] document the death of Tiebout competition." [in brackets addedj).

39 supplies the most efficient corporation laws leads to the conclusion that "the

second most efficient state laws" is the home state jurisdiction.198

Staying at home arises from multiple rationales. Local firms have

s1gm. 'fi 1cant a d vantages m . t h eir . home states. 199 A ssets, employees and connections

which produce political leverage may lose their value if the corporation is

incorporated out of state.200 Incorporation in the home state allows management to

influence local legislature on corporate law rules.201 The smaller the state

incorporation base is the more leverage the corporation has on state corporate law

drafting committees.202 Thus, non-Delaware corporations may prefer not to

relocate to order to retain their leverage on local government.203 However, Prof.

Daines found "weak support for the idea that firms incorporate in-state in order to

secure some regulatory advantage."204 Other factors such as high informational

costs of prospective jurisdictions,205 local lawyers ignorance on out-of-state

corporate law,206 indifference of control block corporations to relocation out-of-

state,207 community and cultural ties,208 disinterestedness for out-of-state

198 See Kaouris, supra note 127, at 1001 (criticizing the theory asserted in Romano, Product, supra note 3, at 236). 199 See Bebchuk & Hamdani, supra note 189, at 607. 200 See Daines, Choice, supra note 15, at 1578-79. 201 See Daines, Choice, supra note 15, at 1578. 202 See Daines, Choice, supra note 15, at 1578. 203 See Bebchuk & Cohen, Firms' Decisions, supra note 190, at Y. 204 See Daines, Choice, supra note 15, at 1596. 205 See Daines, Choice, supra note 15, at 1580. 206 See Daines, Choice, supra note 15, at 1580. 207 See Romano, Genius of Corporate Law, supra note 17, at 45-47. 208 See Bratton & McCathery, New Economics, supra note 24at 234 (noting that "pecuniary costs are not the most significant barriers to individual mobility"). Relocation to Delaware does not worth non-Delawarian corporations relationship with their home state, local government, image (See Romano, Product, supra note 3, at 278-79). Firms preferring to stay at home are relatively 40 corporate laws,209 anticipated benefits to staying at home,210 high costs to relocate, risk aversion or irrelevance of state law for public company governance211 play a role in the immobile condition of these companies. It is impossible to ascertain the exact conditions without examining an entire set of cases because corporations are not required to file with the SEC why they are still incorporated in their home state. However, we can assume that home state companies are not dissatisfied with the legal regime, material legal amendments in other jurisdictions or anticipate engaging in major reorganization transactions. Lastly, the home state bias is not an absolute norm. Intolerance to home state rules will produce voice or exit movements. The fate of the home state effect will depend upon the equilibrium between voice activities and exit activities.

13. Lawyers' Role

Managers have a stake in the IPO level incorporation related decisions.

Managers hold more ownership percentage before the IPO; therefore, the results of unfavorable decisions will likely be borne by them.212 However, lawyers are

older than their Delaware counterparts. Delaware relocation will damage their local firm image (See Romano, Product, supra note 3, at 278). 209 See Romano, Product, supra note 3, at 260, 278. 210 According to Prof. Daines, migrating or staying depends upon the total value of the staying at the home state (See Daines, Incorporation Choice, supra note X, at 1577). 211 Robert J. Brown, Jr., The Irrelevance of State Corporate Law in the Governance of Public Companies, 38 U. Rich. L. Rev. 317, 320-1 (2003-2004) (arguing that officer-director conduct is not supervised in both federal and state levels). A 1985 survey found that top 200 non-Delaware firms consider no distinction among home state law and Delaware (See Romano, Product, supra note 3, at 278). 212 See Daines, Choice, supra note 15, at 1569.

41 independent performers affecting the future of the corporation in the incoming

M&A contests with their work at the IPO stage.213 Commentators note that IPO stage lawyers appear to not take into account "long-term interests of their clients."214 Consumers also do not have the ability to effectively select their legal service providers according to their experience levels,215 and may not reliably assess the services they received. 216 Lawyers choose the original incorporation seat,217 and write the organic documents of the corporation at the IPO stage.218

Consequently, IPO level incorporation choices are impacted by significant agency problems between attorneys and their clients.219 Legal rules, social norms and labor market competition may decrease agency costs up to point. However, the interests may not be completely reconciled between the lawyers and their clientele on t h e mcorporat1on· · c h01ce. · 220

Empirical studies on the antitakeover defenses adopted at the IPO stage also indicate the substantial role of the legal profession during the IPO. It was found that the antitakeover defenses adopted at the IPO stage largely depends on

213 See Coates, supra note 157, at 1303 ("Lawyers, in other words, represent largely autonomous actors making decisions for corporate clients and determining corporate control structures, which in turn have large effects on hostile bid outcomes years later"). 214 See Coates, supra note 157, at 1303 (noting that "[c]orporate lawyers, at least at the IPO stage, appear to be working relatively free of market, ethical, or other constraints, and many appear to be making choices, and mistakes, without determining whether such choices are in the long-term interests of their clients (that is, pre-IPO owner-managers"). 215 See Coates, supra note 157, at 1379. 216 See/d,at 1310. 217 See Romano, Genius of Corporate Law, supra note 17, at 39; Bratton & McCathery, New Economics, supra note 24at 267. 218 See Daines, Choice, supra note 15, at 1580. "Charters, bylaws, stock certificates, and prospectuses are all generated by law firms, drafted by associates (or paralegals), reviewed by partners (or associates), and only cursorily (if at all) reviewed by nonlawyers during the IPO process" (See Coates, supra note 157, at 1310). 219 See Daines, Choice, supra note 15, at 1585-86 ( citing Carney, Production, supra note 58, at 721); Coates, supra note 157, at 1301. 220 See Id, at 1569. 42 the lawyers' experience.221 A company's defenses can be foretold upon the

identification of the drafting lawyer preparing the antitakeover defense rather than the attributes of the corporation installing the antitakeover defenses. 222 Industry specifics or the station of the corporate administration do not play a role in the

selection of the antitakeover defenses.223 The location of the law firms and the relationship between the law firm and its client are more relevant to the selection

of the antitakeover defenses.224 Indeed, lawyers have more self-interest in

incorporation choice than other professionals assisting IPO transactions.225 Legal

fees constitute the bulk of the reincorporation fees.226 Generally, investment

bankers and lawyers assist firms conducting an IPO. Investment bankers deal with the marketing of the IPO. Lawyers set the public disclosure and act before the

SEC.227 Divergence of the antitakeover defenses adopted at the IPO stage can be

explained by inadequacies of the investment bankers who conduct the valuation of the antitakeover defenses or lawyers who set forth the antitakeover defenses.228

The legal services rendered to the company at the IPO stage are the most

critical because thestructure of governance at the IPO stage is the biggest

determinant of a takeover contest.229 A company has the ability to choose different

221 See Coates, supra note 157, at 1303 ("I present evidence from two large samples of IPOs that suggests that takeover defenses are chosen at the IPO stage primarily based on the takeover experience of the corporate lawyers working for the company at the time of the !PO"). 222 See Coates, supra note 157, at 1303. 223 See Id, at 1368. 224 See Id, at 1364. 225 See Daines, Choice, supra note 15, at 1580. 226 See Romano, Product, supra note 3, at 246. 227 See Coates, supra note 157, at 1308-09. 228 See Id, at 1309. 229 See Id, at 1302.

43 types and amounts of defenses that will regulate hostile bids for the life of the company only at the IPO stage.230 Institutional shareholder activism renders organizational transformations more difficult in the post-IPO period. Adoption of antitakeover defenses during the life of the corporation represents a reallocation of resources. Moreover, institutional shareholders began opposing the installation of antitakeover defenses during the I 990s.231

Relocation decisions in the post-IPO phase also pose the same agency problems. Generally, the outside or inside legal counsels choose the target jurisdiction for reincorporation related matters.232 Moreover, attorney and investor banker advice play an important role in preventing flight out of Delaware.233

Theoretically, in-house lawyers' interests have been aligned with the corporations' interests. Thus, they would act on behalf of corporate interests in the remcorporat1on• . transactions.. 234 0 pponents assert t hat attorneys , persona 1 sta k es play a role in incorporation choices along with the features of the target domicile.235 Further, self-interest may be observed in the distinction between local and national law firms. While, local law firms prefer that their clients stay at the

230 See Id., at 1308. 231 See Coates, supra note 157, at 1306, 1321 [citations omittedj; Gordon, Corporations, supra note 43, at 1960 (noting that migrations into stringent antitakeover jurisdictions would face shareholders' opposition). 232 See Romano, Product, supra note 3, at 274 table 12. Studies found that relocation is suggested by primarily by outside counsel. It was reported that the reincorporation decision made by outside counsel in 52.5% of the cases. Managers decide on the 21.7% cases and in-house counsel only in 16.4% of the decisions (See Romano, Product, supra note 3, at 274-75). 233 See Bratton, Nowhere, supra note 34, at 424. 234 See Anthony Ogus, Competition between National Legal Systems: A Contribution of Economic Analysis to Comparative Law, 48 Int'] L.Q. 405, 412 (Apr. 1999). See also Romano, Product, supra note 3, at 274-75 (indicating that outside lawyers might have incentives to reduce their own cost by reincorporating in Delaware). 235 See Daines, Choice, supra note 15, at 1559. 44 home jurisdiction, national firms suggest migrating to Delaware.236 The reason for this phenomenon may either be that lawyers act in their self-interest or they may not "fully" appreciate Delaware law.237 Other commentators note that local lawyers may not recommend out of state incorporation or reincorporation as they are heavily invested in the local law. 238 In fact this situation represents a conflict of interest between the state of Delaware, the corporation service company and

Delaware lawyers. Despite the fact that Delaware is the de facto national corporate regulator,239 membership to Delaware bar association is restricted.

Franchise tax revenues collected by the State of Delaware would be maximized if

Delaware bar membership is opened to all non-Delaware corporate lawyers.

However, then the revenues generated by the litigation would be shared by non-

Delaware lawyers. Thus, opening the Delaware corporate practice nationwide would be beneficial to eliminate the monopoly profits generated by Delaware lawyers.

B. Jurisdictional Changes and Shareholder Wealth

236 See Daines, Choice, supra note 15, at 1584, 1596. 237 See Daines, Choice, supra note 15, at 1596. 238 See Romano, Product, supra note 3, at 275-76. 239 See M annmg, . S tate Compet1t1on, . . supra note X , at 783; Bratton, Nowhere, supra note 34, at 409 (Agreeing with Manning on Delaware's national position.); Daines, Choice, supra note 15, at 1559; Douglas M. Branson, Indeterminacy: The Final Ingredient in an Interest Group Analysis of Corporate Law, 43 Vand. L. Rev. 85, 113 (Jan., 1990)

45 1. Allocation of the Burden of Proof

Ample law review articles have been published after the role of state competition on corporate law debate had been broke out in the 1970s. Prof.

Seligman called for an empirical study to test the assumptions of both schools as

240 early as 1976. The first empirical study on the wealth effects of reincorporation was conducted by Peter Hyman in 1979.241 Then, proponents of the market oriented theory raised the bar of the discussion. They demanded the critics of regulatory competition prove that Delaware regulation leads to shareholder wealth reduction. According to the market oriented school, the burden of proof is on the race to the bottom school's proponents to show which corporate code impairs shareholder rights.242 They indicated that no evidence had been asserted to show that Delaware shareholders and corporations incur losses because of Delaware incorporation.243 Ifwe dismiss existing claims because of the absence of empirical research, then we have to exclude all great philosophers such as Adam Smith.

240 Joel Seligman, A Brief History of Delaware's General Corporation Law of 1899, 1 Del. J. Corp. L. 249, 287 (1976). 241 See Weiss & White, Reactions, supra note 48, at 559 fn. 60 (noting incorrectly that '"'Peter Dodd and Richard Leftwich were the first to evaluate the impact on stock prices of announcements that companies planned to reincorporate in Delaware"). 242 See Romano, Genius of Corporate Law, supra note 17, at 19. 243 See Bayless Manning, Thinking Straight about Corporate Law Reform, 41 Law & Contemp. Probs. 3, 18 (Summer, 1977); Dodd & Leftwich, supra note 14, at 260 (noting that proponents shareholder exploitation theory provide no empirical evidence to support their claims.); Schwartz, Federalism, supra note 151, at 585 (noting that there was no decisive empirical study in the 1980s promoting the efficiency of the federal corporate regime); Robert H. Sitkoff, Corporate Political Speech, Political Extortion, and the Competition for Corporate Charters, 69 U. Chi. L. Rev. 1103, 1150-1 (2002) (noting that "But none "refutes the empirical findings that Delaware law and, hence, competition for charters have provided shareholders with economic benefits"); Romano, Question, supra note 158, at 1606-07 (noting that Prof. Winter's position has more empirical proof than Prof. Cary's).

46 Thus, the market oriented theory changed its gears to focus on empirical effects on the state competition by conducting studies on the wealth effects of initial incorporation or later relocation into Delaware.244 Opponents of the state regulation of corporate law issues object the allocation of burden of proof as it is implausible.245 Outcome of prospective federal corporate law legislation may not be quantified before the enactment of such act. 246

2. The Role of Empirical Studies

First and foremost, the Delaware legislature, the Corporate Law

Committee of the Delaware State Bar Association and the Delaware judiciary are not conducting studies/empirical research before giving decisions or legislative activities. Indeed, the Rules of Procedure for the Supreme Court of the Delaware,

Delaware Superior Court and Court of Chancery do not require a regulatory impact analysis or empirical research before engaging in judicial review. Further, there is no governmental body within the State of Delaware corresponding to the

SEC's Office of Economic Analysis. Doing empirical research on the decisions/regulations where no analysis other than judicial intuition is employed, will not be decisive on the empirical debate.

244 See Bebchuk & Hamdani, supra note 189, at 564. 245 See Bratton, Nowhere, supra note 34, at 436 (citing MBCA §§ 8.61, 8.62; Cede & Co. v. Technicolor Inc . . 634 A .. 2d 345, 366 n. 34 (Del. 1993); Marciano v. Nakash, 535 A. 2d 400, 403- 05 (Del. 1987)). 246 See Ibid.

47 There are numerous objections to the empirical research. The mere existence of multiple corporate law regimes shows efficiency because it lets management match a governance structure with its organization.247 Therefore, securities prices should not diverge pursuant to choice of incorporation.248

Reincorporation signifies only a suboptimal governance structure in the previous jurisdiction pursuant to the logic of the market oriented schooI.249 Moreover, empirical studies are mere evidence showing correlation and not decisive proof.

Thus, empirical studies will not resolve the state competition debate,250 and current evidence is not convincing.251 No additional empirical studies would be undertaken if a single empirical study had clearly proved one side of the debate.

Event studies on relocations are progressing and not yet settled. Each empirical study reviews and refutes the studies published before them on methodological and substantive grounds.252 Thus, the last empirical study standing will be more

247 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 179-80. 248 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 184. 249 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 188. 250 See Bebchuk, Bar-Gill & Barzuza, The Market, supra note X, at 150 (Evidence may not demonstrate "whether state competition works well"); See Daines, Value, supra note 18, at 527 (noting that event studies on reincorporations are not capable of identifying the impact of Delaware law on firms never reincorporating). 251 See Weiss & White, Reactions, supra note 48, at 553, 560-66 (referring to Dodd-Leftwich, Baysinger-Butler and Romano studies); See Daines, Value, supra note 18, at 527 (notes that previous studies were not decisive because of the absence of random sampling). 252 See Daines, Value, supra note 18, at 527 (finding that that previous studies were not decisive because of the absent random sampling); Weiss & White, Reactions, supra note 48, at 566 (criticizing Prof. Romano's study as it is "no more relevant evidence than did the works of Dodd and Leftwich or Baysinger and Butler."); Ramsay, Federalism, supra note 160at 189 (Dodd- Leftwich, Romano and Weiss-White empirical studies do not corroborate that state corporate law is superior to federal law); Romano, Product, supra note 3, at 232 (finding that the Dodd-Leftwich study is not insulated from the impact of other events); Daines, Value, supra note 18, at 527 (finding that that previous studies were not decisive because of the absent random sampling); Romano, Product, supra note 3, at 272 (rep01is that that her findings are different than Dodd- Leftwich study); See Daines, Value, supra note 18, at 529 (criticizing Netter-Poulsen, Hyman, Wang, Peterson, Heron-Lewellen studies for not distinguishing between companies entering into Delaware and firms migrating out of Delaware). Dodd-Leftwich and Baysinger-Butler studies 48 reliable. More empirical evidence will be coming until all the dimensions on state

compet1tJon. . re Iate d to re Iocat1on . are d.1scovere d .253

3. Methodological Obstacles to Effective Evaluation

Empirical analysis with regard to corporate relocations displays significant

methodological hardships. Even Prof. Winter, the pioneer of the market oriented

school, accedes that we can not measure the benefits of regulation exceeds its

costs.254 Empirical studies merely show the margin between Delaware and its

nearest rival. It does not show the total utility provided by state competition.255

The convergence among jurisdictions256 and the volatility of the Delaware law257

renders empirical studies more difficult to rely on. Consequently, empirical

studies will remain "inconclusive" unless methodological hardships are

mastered.258

have been criticized as handling the state corporate law regimes as intact legal platforms. Investors may prefer particular items of state laws while not approving the rest (See Weiss & White, Reactions, supra note 48, at 563). However, this aspect of aforementioned studies comes directly from the internal affairs doctrine. 253 Scholars who did the most prominent studies on efficient market hypothesis expect that further studies will fine tune the knowledge on the functioning of the efficient market concept. As Fama put it "The old saw, "much remains to be done," is relevant here as elsewhere" (See Eugene F. Fama, Efficient Capital Markets: A Review of Theory and Empirical Work, 25 J. Fin. 383, 416 (May, 1970)). Development of technology will yield better studies on the "departures from efficiency" in the markets (Burton G. Malkiel, The Efficient Market Hypothesis and Its Critics, 17 J. Econ. Pers. 59, 80 (Winter, 2003)). 254 See Ralph K. Winter, Jr., On Protecting the Ordinary Investor, 63 Wash. L. Rev. 881, 892 ( 1988). 255 See Coffee, De Facto Federal Minimum Standards, supra note 183, at 768. 256 See Coffee, De Facto Federal Minimum Standards, supra note 183, at 769 (noting that replicas of Delaware case law adopted by other states renders empirical studies difficult to rely on); Black, Trivial, supra note 158, at 586 (noting that state corporate laws converged). 257 See Coffee, De Facto Federal Minimum Standards, supra note 183, at 768. 258 Corporate reactions or promulgation of statute might have a signaling impact beforehand. Thus, date of promulgation of statute may not be ascertained because of the market anticipation of that statute (See Charny, Competition Among Jurisdictions, supra note 108, at 434). Signaling affects 49 4. Investors' Appraisal of the Corporate Law

The efficient market hypothesis postulates that securities prices accurately reflect all the available information in an efficient market.259 The public has

"monopolistic access" to all available information in the strong form the efficient market.260 The efficient market hypothesis has an important implication for the charter market that is controversial in legal academia; securities prices will reflect the contractual terms and state corporate laws. The market oriented position asserts that investors consider state corporation laws and price them accordingly.261 Unavailability of information to some investors or disputes over the ramifications of information does not render a market inefficient.262 However, the presence of investors able to make more accurate decisions render a market

may offset decreases by reincorporation into more liberal jurisdictions (See Charny, Competition Among Jurisdictions, supra note 108, at 438-39). Empirical analysis on regulatory competition on bankruptcy filings does also display difficulties as significant noise effects associated with bankruptcy incident may not be neutralized (See David A. Skeel, Jr., What's So Bad About Delaware?, 54 Vand L. Rev. 309, 316-7 (2001)). 259 See Eugene F. Fama, Efficient Capital Markets: Reply, 31 J. Fin. 143 (Mar., 1976); Burton G. Malkiel, Is the Stock Market Efficient?, 243 Sci. New Ser. 1313 (Mar. 10, 1989) (concluding that studies after the October 1987 market crash on the demise of the efficient market is too early); Eugene F. Fama, Efficient Capital Markets: II, 46 J. Fin. 1575 (Dec., 1991) (event studies evince the existence of an efficient market) Studies also show that particular market participants with nonpublic information outperform the market (See Jeffrey F. Jaffe & Robert L. Winkler, Optimal Speculation Against an Efficient Market, 31 J. Fin. 49 (Mar., 1976) [citations omitted]). 260 Eugene F. Fama, Efficient Capital Markets: A Review of The01y and Empirical Work, 25 J. Fin. 383 (May, 1970) 261 See Dodd & Leftwich, supra note 14, at 261; Frank H. Easterbrook, The Corporate Contract," 89 Co/um. L. Rev. 1416, 1431 (1989) (noting that stock prices are influenced by the quality of the corporate law and all corporate law provisions will be mirrored in the stock prices except derivative litigation); Weiss & White, Reactions, supra note 48, at 563 (noting that Dodd-Leftwich and Baysinger-Butler studies assume that investors react to state corporate laws). 262 See Fama, Review, supra note 252, at 388.

50 inefficient.263 Thus, individual investors do not need to be experts or professors of

the corporate law .264

Market oriented scholars' key argument is that corporate law rules are

incorporated into the share price at the IPO stage.265 Opponents assert that

corporate law rules are not embedded in the IPO price266 because of the

difficulties of pricing the most significant contractual terms,267 and the common

inaccuracies in the IPO valuation independent of the corporate law. 268

The impact of judicial review on the public has been bifurcated since the

Roman Empire:269 Actio popularis and erga omnes. Actio popularis is, as seen in

public law, a case whose results are binding on the entire public. Decisions of

actio popularis reflect systematic risk. However, erga omnes cases, usually private

law cases, resolve the disputes only among the parties of the litigation, and therefore are binding only on the parties. Erga omnes decisions generate firm

specific risks. If investors perceive the application of precedents to them as a

263 See Fama, Review, supra note 252, at 388. 264 See, Easterbrook & Fischel, Contract, supra note 260, at 1431. 265 See, Easterbrook & Fischel, Contract, supra note 260, at 1431; Stephen J. Choi & Andrew T. Guzman, Choice and Federal Intervention in Corporate Law, 87 Va. L. Rev. 961, 983 (Sept., 2001) (noting that IPO firms have incentive to establish a governance structure, i.e. jurisdiction, antitakeover regime, which maximizes their value). 266 See Bebchuk, Desirable Limits, supra note 12, at 1480 [citations omitted]; Weiss & White, Reactions, supra note 48, at 560 (noting that investor valuation of state corporation laws belief does not inevitably prove that relocations cause price movements in the stock market). 267 See Loewenstein, Polemic, supra note 127, at 538. 268 See Melvin Aron Eisenberg, The Structure of Corporation Law, 89 Colum. L. Rev. 1461, 1518 (Nov., 1989) (noting that Widespread undervaluation and overvaluation at the IPO price also reflect that the governance terms are not embedded in the !PO price); Id., at 1517 (noting that the IPO stock price is ascertained during the underwriting process which the constituents thereof do not consider the rules regarding governance); Black, Trivial, supra note 158, at 579 (noting that IPO pricing may not be efficient for small sized offerings). 269 White and White follow a similar distinction. They classify Delaware cases as the ones "fine tuning law" and the ones bringing "[d]ramatic changes in the law" (See Elliott J. Weiss & Lawrence J. White, A Response to Professor Fox, 76 Calif. L. Rev. 1047, 1056 (Oct., 1988); Weiss & White, Reactions, supra note 48, at 551).

51 distant event, then judicial precedents would be unable to affect the stock prices.270 Thus, stock prices usually do not reflect results of derivative litigation.271 The significance of Delaware jurisprudence from actio popularis should be so overwhelming, such as in the Smith v. Van Gorkom case,272 that it impacts stock prices. The evidence of the impact of judicial review on the corporate law is contradictory. Marketists assert that evidence proves any amendments on Delaware law are reflected in securities prices immediately.273 On the other hand, reliable evidence documented that the stock market was not sensitive to seven drastic Delaware precedents amending the prior law.274

Vagueness and indeterminancy elements render judicial decisions hard to price for the market.275 It would be best if every judicial decision is not reflected in the stock market. Considering the Delaware judiciary's volatility, transaction costs would skyrocket if all Delaware decisions are reflected in the stock market.276

270 See Weiss & White, Reactions, supra note 48, at 589. 271 Daniel R. Fischel & Michael Bradley, The Role qf Liability Rules and the Derivative Suit in Corporate law: A Theoretical and Empirical Analysis, 71 Cornell L. Rev. 261 (1986); Easterbrook & Fischel, Contract, supra note 260, at 1431 fn. 19 (agreeing with Fischel & Bradley). 272 488 A.2d 858 (Del., 1985). See for the impact of the Smith v. Van Gorkom SYMPOSIUM: SMITH v. VAN GORKOM:, Jonathan R. Macey, Insights About CE. 0.s, Corporate law Rules, and The Jurisdictional Competition for Corporate Charters, 96 Nw. U. L. Rev. 607 (Winter, 2002). 273 See Hyman, Controversy, supra note 28, at 380. 274 Weiss and White empirically evaluated market reactions to seven significant yet unexpected Delaware decisions (See Weiss & White, Reactions, supra note 48, at 553). They "found no statistically significant market reaction to any of the seven decisions" (See Weiss & White, Reactions, supra note 48, at 553). 275 See Weiss & White, Reactions, supra note 48, at 593. 276 Consequently, filing of cases by shareholders would become material information and prospective plaintiffs would become insiders.

52 5. Delaware Premium

Jurisdictional changes may affect the total value of the corporation and the value of the control premium positively, negatively or not at all.277 The price impact of legal platform changes may not be known beforehand.278 Empirical studies conducted by Prof. Hyman found that stock prices of Delaware migrating firms have beaten the S&P index within four days prior to the announcement of reincorporation.279 Migration into Delaware does not harm the shareholders and indeed it benefits them.280 Prof. Hyman speculated that these results might be caused by positive evaluation of the market or insider trading.281 The Romano study finds that Delaware reincorporation "is associated, in some situations, with positive abnormal returns for the shareholders and, at worst, it is a zero net present value transaction".282 These results are further echoed in other parts of business association law.283 Studies have found that shareholder wealth diminished by reincorporations for antitakeover purposes while shareholder wealth increased for

277 See Hyman, Controversy, supra note 28, at 3 81. 278 See Id, at 382. 279 See Id, at 385. Prof. Romano reports that her studies are "consistent" with Hyman's study "which used a slightly different technique" (See Romano, Product, supra note 3, at 272 fn. 66 (citing Hyman, Controversy, supra note 28, at 386)). 280 See Hyman, Controversy, supra note 28, at 387-8. 281 See Id, at 385. Prof. Hyman comments that information regarding reincorporation into Delaware is not subject to I Ob-5 liability (See Id, at 385-86).281 Then, we should assume that reincorporation is not material information. 282 See Romano, Product, supra note 3, at 272-73. 283 See Bruce H. Kobayashi and Larry E. Ribstein, Evolution and Spontaneous Uniformity: Evidence for the Evolution of the Limited Liability Company, 34 Econ Inquiry 464, 4 70-77 (July 1996) (providing empirical evidence for the proposition that state statutes will evolve toward an efficient level without the imposition of uniform laws).

53 reincorporations limiting director liability in the period of 1980-1992.284 After these findings, the market oriented school assumed the "race to the bottom" concept as managerial entrenchment and the "race to the top" as the contractual efficiency.285 Empirical evidence is interpreted by marketists as an indicator of contractual efficiency. 286 On the other hand, critics conclude that these merely indicate that share prices did not fall with reincorporation.287

Prof. Winter argues that the stock market values of corporations incorporated in inefficient states would diminish spontaneously or with the sales of shareholders.288 Prof. Romano notes that "[t]he corporation that does not migrate will become unprofitable and eventually go into bankruptcy" according to the proponents of shareholder wealth maximization.289 Therefore, all non-

Delaware corporations would be extinct if Delaware granted a substantial premium.290 To sum up, ifthere was gold, then there would be a gold rush.

6. Extension of Control Premium

284 See Heron & Lewellen, Reincorporation, supra note 13, at 549, 550. 285 See Ibid. 286 See Ibid.; Skeel, About Delaware, supra note 257, at 315 (asserting that Delaware premium is a strong indicator of Delaware's superiority in corporate law). 287 See Ramsay, Federalism, supra note 160 at 186 (citing See Dodd & Leftwich, supra note 14 281-286); Bebchuk, Desirable Limits, supra note 12, at 1448-49 (citing Romano, Product, supra note 3, at 267; Weiss & White, Reactions, supra note 48, at 560 (noting that These empirical findings only support the idea that investors are not unsympathetic to Delaware law without an evaluation of the state's distinct features of corporate law). 288 See Romano, Product, supra note 3, at 230. 289 See Romano, Product, supra note 3, at 230. 290 See Baysinger & Butler, Role of Corporate Law, supra note 16, at 188.

54 Evidence suggests that the so-called Delaware premium is an extension of the control premium. Prof. Hyman methodologically distinguished between the market for corporate control and the market for minority interests.291 Thus, he

"purged" mergers and reorganizations from his study.292 Industry movements and

business fluctuations are purged as the sample represents a diverse portfolio consisting of various industries and time periods.293 This methodology is correct

as Romano found a slightly higher premium for relocations for merger and

antitakeover purposes than relocations for state taxation purposes.294 Prof.

Romano's event study classified relocations into three categories according to their purposes. She categorized relocations as pre-IPO relocations, pre-merger relocations and takeover protection relocations.295 Her results produce positive cumulative average residuals for all categories which were statistically

insignificant except pre-merger relocations.296 Thus, the reincorporation premium

is only available in mergers and acquisition connected reincorporations pursuant to Romano's study.297 Consequently, absent change of control transactions involving control premiums, price movements associated with reincorporation are

291 See Hyman, Controversy, supra note 28, at 382. 292 See Hyman, Controversy, supra note 28, at 381-84. Heron-Lewellen study also excludes reincorporations concurrent with major transactions (See Heron & Lewellen, Reincorporation, supra note 13, at 553). However, Dodd-Leftwich study is not insulated from the impact of other material events effecting stock prices (See Romano, Product, supra note 3, at 232). 293 See Hyman, Controversy, sup·ra note 28, at 385. 294 See Romano, Product, supra note 3, at 271, 279-80. 295 See Romano, Product, supra note 3, at 268. Prof. Romano's study model is different than Dodd & Leftwich's as she had grouped the type of relocation by the purpose (See Romano, Product, supra note 3, at 267). 296 See Romano, Product, supra note 3, at 268-71. It should be kept in mind that ""significance" in statistics bears no necessary relationship to the ordinary meaning of significance -- that something is important" (See Eisenberg, Structure, supra note 267, at 1489). 297 See Romano, Product, supra note 3, at 279-80.

55 negligible. Thus, these results are derived from control premium anticipation in

the market.298 Management may time domestication with positive events in order

to eliminate market reaction.299 Merger friendly provisions are not desirable for

investors' overall. Target corporation shareholders rather than control seeking

corporations would favor Delaware's merger friendly provisions. 300 Prof. Daines

found that Delaware firms were worth on average 2% more than other firms in his

study of 4481 stock exchange listed firms in 1981-1996.301 He also found that the

Delaware premium arises from the frequency of takeovers accomplished in

D e 1aware. 302 M oreover, corporations. mcorporate . d m . antita . k eover states receive.

takeover bids less frequently and are worth less than their Delaware

counterparts.303 Consequently, merger or antitakeover programs conducted

simultaneously with reincorporation distort the impact of reincorporation.

However, the story does not end here. Critics also object to the datasets

employed in these studies. Companies setting sail for Delaware have solid

298 See Ramsay, Federalism, supra note 160 at J 89 ("Romano's results are not "surprising because it is in this precise situation that the value of shares increases as shareholders of the company anticipate the rewards of such programme"); See Coffee, De Facto Federal Minimum Standards, supra note 183, at 767 (noting that if a company is moving to Delaware, then market expectations anticipating a control premium increases) 299 See Bebchuk, Desirable Limits, supra note 12, at 1449. 300 See Weiss & White, Reactions, supra note 48, at 565. 301 See Daines, Value, supra note 18, at 532. Prof. Daines excluded utility companies, banks, and financial firms because of their separate federal regulatory burden and "rules governing the takeovers of such firms are determined by the state in which they operate" (See Daines, Value, supra note 18, at 531 ). 302 See Daines, Value, supra note 18, at 525, 541 ( estimates the value of Delaware firms by using Tobin's Q). Prof. Daines finds that Delaware law expedites the merger process (See Daines, Value, supra note 18, at 541). As a result, Delaware firms worth more because acquisition of a Delaware firms cost less (See Daines, Value, supra note 18, at 541 (noting that his theory "is a specific case of the general hypothesis that Delaware law lowers transaction costs")). Thereafter, he concludes that Delaware does not lead to a race to the bottom (See Daines, Value, supra note 18, at 528). 303 See Daines, Value, supra note 18, at 528.

56 financial condition.304 These studies do not exclude companies which experienced high growth and earnings before corporate migration.305 It should be noted that if they had done so, then the size of their sample would shrink enormously. After

Prof. Hyman purged noisy events, only 25 corporations were left in his dataset.306

The size of the control premium depends upon the capital structure of the

Delaware corporation.307 The average Delaware corporation is larger, more leveraged and tends to participate in takeovers more frequently. 308 Delaware firms have more antitakeover devices in effect than the nationwide average.309 The explanation of the Delaware premium as a trace of the control premium and accounting control premium as a result of the firm structure is unsatisfying. For this reason, opponents of the event studies are not persuaded by these massive empirical studies conducted during the last two decades.310

Even if there is a premium, it fades away. "Statistically significant"

Delaware premiums do not have an everlasting effect and diminish shortly after

304 See Heron & Lewellen, Reincorporation, supra note 13, at 565. 305 See Coffee, De Facto Federal Minimum Standards, supra note 183, at 768 (criticizing Prof Romano's dataset). Some commentators note that reincorporating firms are the companies in transition (See Heron & Lewellen, Reincorporation, supra note 13, at 566). 306 See Hyman, Controversy, supra note 28, at 381-84 307 See Daines, Value, supra note 18, at 553 (noting that his "results suggest that though valuable firms may incorporate in Delaware, Delaware law also improves firm value."). 308 See Daines, Choice, supra note 15, at 1591 (noting that the structure of the Delaware incorporated corporations is different than nationwide average.). 309 See Coates, supra note 157, at 1366 (study on "randomly" selected 180 IPOs which were finished in the 1991-1992 period). 310 See Daines, Value, supra note 18, at 529; See Lynn M. LoPucki & Sara D. Kalin, The Failure of Public Company Bankruptcies in Delaware and New York: Empirical Evidence of a "Race to the Bottom," 54 Vand. L. Rev. 231, 232-3 (2001) (noting that Delaware premium merely indicates a psychological factor existent in the market).

57 the reincorporation.311 Tobin's Q in Delaware is decreasing because of diminishing merger activity.312 The cause of this result is the relocation of protection seeking firms to Delaware.313

This brings us to a need for further inquiry on whether Delaware firms are acquired because of their sub-optimal management or the reason for acquisition transactions are for strategic reasons. Moreover, empirical studies on reincorporation do not distinguish between the possible stock price fluctuations in connection with mass migration movements towards Delaware after corporate law amendments. The relocation process hardly yields a price impact itself.

Relocations are either transaction specific or take advantage of a code, escape from a corporate code, take advantage of another corp_orate code, or escape from war.

7. The Diminishing Significance of the Corporate law

Investors will discount securities of a corporation incorporated in a state allowing investor expropriation by management.314 The notion that investors discount bad law is not applicable to corporations that are already public.315 It also

311 Dodd-Leftwich study establishes that shareholders earn abnormal returns with the initiation of relocation procedure into Delaware rather than negative returns. Shareholders earn normal returns thereafter (See Dodd & Leftwich, supra note J4, at 261, 275). 312 Barzuza, Price Considerations, supra note 44, at 203. 313 Barzuza, Price Considerations, supra note 44, at 202. 314 See Charny, Competition Among Jurisdictions, supra note 108, at 437; Daines, Value, supra note 18, at 526 (noting that "[w]hen legal rules increase managerial slack and entrench incumbent managers, investors pay less"). 315 See Eisenberg, Structure, supra note 267, at 1516. 58 implies a buyer beware notion.316 Corporations will pay more for corporate law that increases value.317 An opportunistic relocation process would yield a negative stock price.318 Critics assert that the absence of negative returns on Delaware relocation indicates that the origin and target jurisdiction laws converged and equally impaired shareholders rights after reviewing those considerations.319

Critics assume that states are already

in the bottom.320 Prof. Cary articulated this observation that state competition

leads to a "uniform low-grade regime." Therefore, relocation among these jurisdictions would not have a price impact in the stock market.321 It is true that corporate law is for the most part uniform in the U.S. 322 "The history of state corporation law is ... largely a history of drastic reduction of legal restrictions on management and of the legal rights of shareholders. "323 Therefore, the importance of corporate law has diminished and corporate law became only one of the minor determinants in the American corporate governance system.324 Not only has the

316 See Eisenberg, Structure, supra note 267, at 1516 ("The argument is that a shareholder who buys stock cannot fairly complain that the corporation has a suboptimal managerial rule, because even if it does, the shareholder has gotten what he paid for.") 317 See Barzuza, Price Considerations, supra note 44, at 169. 318 See Romano, Genius of Corporate Law, supra note 17, at 18. 319See Bebchuk, Desirable Limits, supra note 12, at 1449-50. 320 See Eisenberg, Structure, supra note 267, at 1508. 321 See Eisenberg, Structure, supra note 267, at 1509. 322 See Cary, Reflections upon Delaware, supra note 3, at 665-66 (Rival states duplicate Delaware law); See Winter, Theory of the Corporation, supra note 144, at 255 (Delaware is very similar to its rivals.); Kostel, Public Choice, supra note X, at 2150 (noting the consensus on the "consistency" of the corporate law). 323 See Winter, Theory of the Corporation, supra note 144, at 255. 324 See Black, Trivial, supra note 158, at 542 et seq. (successfully asse1iing that corporate law became trivial); Robert J. Brown, Jr., The Irrelevance of State Corporate Law in the Governance of Public Companies, 38 U. Rich. L. Rev. 317, 317 et seq. (2003-2004) (successfully asserting that corporate law rules became irrelevant); Troy A. Paredes, A Systems Approach to Corporate Governance Reform: Why Importing U.S. Corporate Law isn't the Answer, 45 Wm and Mary L. Rev. 1055, 1103, 1075-6 (2004) (noting that U.S. corporate law supplements "institutions, 59 state of Delaware, but corporate law scholars also have been responsible in

d1mm1s. . . h"mg t h e currency o f corporate law. 325 Numerous empirical studies have

been conducted and normative studies have been neglected by brilliant corporate

law scholars once the state competition debate began.326

Competitive federalists contend that state revenue maximization incentives

produce the most efficient laws. Most efficient corporate laws are the laws that

maximize firm value.327 Corporations relocate to jurisdictions with the most

efficient corporate law systems.328 Delaware is the second best jurisdiction

according to this logic. Tax inversions show that Delaware is not efficient and tax

law considerations are superior to corporate law considerations. Indeed, corporate

law scholars neglected the tax inversion area. The mass inversion wave happened

from Delaware to Bermuda in order to effectuate federal tax savings in the 1998-

2002 period.329 Statistically significant premia in the stock market have been

reported in connection with inversions out of Delaware to Bermuda.330 The U.S.

incentive structures, constraints, and practices" and thus it is only a minor module in the U.S. corporate governance system); Symposium Norms & Corporate Law: Marcel Kahan, The Limited Significance of Norms for Corporate Governance, 149 U. Pa. L. Rev. 1869, 1872 (June, 2001) (noting that "norms have only a limited significance" for American public companies today). 325 See Black, Trivial, supra note 158, at 591 (recommending a policy based corporate law teaching instead ofa legal one because of the diminishing importance of the corporate law). 326 It was noted that the law reviews lost the interest of judiciary. See, Adam Liptak, When Rendering Decisions, Judges are Finding Law Reviews Irrelevant, N.Y. TIMES, March 19, 2007, at A8 (arguing that law reviews lost their utility); Michael W. Dowdle, The Case Against Law Reviews Rebutted The New York Times, N.Y. TIMES, December 21, 1990, A38 (arguing that law reviews do not have to respond instant needs of the legal practitioners). 327 Manne; See Romano, Product, supra note 3, at 229 (Agreeing with Manne). 328 See Romano, Product, supra note 3, at 228. 329 See, Part II(B )(7). 330 See, Jim A. Seida & William F. Wempe, The Market's Reaction or Nonreaction to Corporate Inversions, 96 Tax Notes 1146, 1149 (2003); Mihir A. Desai & James R. Hines, Jr., Expectations and Expatriations: Tracing the Causes and Consequences of Corporate Inversions, 55 Nat'! Tax J. 409, 430 (2002); John Kelly, Haven or Hell: Securities Exchange Listing Standards and Other Proposed Reforms as a Disincentive for Corporate Inversion Transactions, 14 Minn. J. Global Trade 199, 205 (Winter, 2004) (citing Bruce Bartlett, Why the Inversion Aversion?, available at 60 Congress enacted anti-inversion provisions m order to protect the U.S. and

Delaware tax base after pressure from professional interest groups by undercutting

flourishing inversion activity.331 Trade liberalization, opening a market to foreign

entrants, may produce a more competitive environment in the charter market rather than domestic regulation and enforcement.332 Therefore, it would be best if

federal anti-inversion provisions are repealed and foreign entry into the charter

mar ket 1s· encourage d .333

http://www.nationalreview.com/nrof_bartlett081202.asp (Aug. 12, 2002)). It should be noted that inversion premia is also controversial (See Kelly, Inversion, supra note 329, at 206 (noting that noted the evidence is not decisive that corporations engage in tax inversion because of a possible increase in the share value)) 331 See, Part II(B)(7). 332 Robert D. Cooter, Market Modernization of Law: Economic Development Through Decentralized Law, in "Economic Dimensions in International Law" (Jagdeep S. Bhandari & Alan 0. Sykes eds.; 1997) at 306 (discussing the convenience of trade liberalization in the developing countries as a domestic antitrust policy); See Larry E. Ribstein, Delaware, Lawyers, and Contractual Choice of Law, 19 Del. .J. Corp. L. 999, 1228 (Summer, 1994) (noting that "increasing international trade and competition may be able to constrain even the larger U.S. states" against state predation). 333 Cf. "Few companies can credibly threaten to re-incorporate in another country. If they did, Congress could tax them anyway, and the SEC can and does write rules governing how securities issued by foreign companies can be sold and traded in the United States" (See Black, Trivial, supra note 158, at 563).

II. Modes of Legal Transformation

A. Choice of Law

The internal affairs doctrine requires deference to the law of the state of incorporation on matters involving "the relations inter se of the corporation, its shareholders, directors, officers or agents" except when a non-incorporation state has more significant relationship with the occurrence and parties of a particular issue.334 The internal affairs doctrine provides certainty for corporate transactions and the U.S. Supreme Court set forth that "[n]o principle of corporation law and practice is more firmly established than a State's authority to regulate domestic corporations"335

The Restatement provides additional guidance that matters falling under the internal affairs doctrine include "steps taken in the course of the original incorporation, the holding of directors' and shareholders' meetings, charter and by- law amendments, mergers, consolidations and reorganizations and the reclassification of shares."336 Domestication and conversion after the original incorporation is not included within this definition while the original

334 RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 302 (1971); RESTATEMENT (SECOND) OF CONFLICT OF LAWS 302 cmt. a ( 1971). 335 CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 89 (1987). See also McDermott !nc. v. Lewis, 531 A.2d 206 (Del. 1987). 336 RESTATEMENT(SECOND) OF CONFLICT OF LAWS 302 cmt. a (1971).

62 incorporation and reincorporation (under the term "merger and consolidation") is within the coverage of the Restatement. However, lack of coverage does not create enormous legal consequences because steps taken to effectuate domestication such as the "holding of directors' and shareholders' meetings, charter and by-law amendments, reorganizations and the reclassification of shares" are covered. In short, an inference derived from the internal affairs doctrine is that the proceedings enabling the move out-of-state will be subject to the departure state and the proceedings to continue the corporation in the destination state will be governed by the destination state.

Scholars noted that the development of the internal affairs doctrine took place before the emergence of state competition in the charter market.337 Concerns over state sovereignty and impracticality of out-of-state enforcement led to the development of early internal affairs jurisprudence.338 The internal affairs doctrine began to serve the state charter market only after New Jersey started the charter market in the late 19 111 century.339 Although the internal affairs doctrine provides predictability to corporate transactions,340 it is outmoded and outdated with regard to corporate migration. The internal affairs doctrine overlooks the inherent conflict of interest between the incorporation state and migrating firms because the charter market was not a concern in the development of the internal affairs

337 See Tung, Internal, supra note 179, at 3. Tung also notes that Initial utility of the internal affairs doctrine was a "market sharing" arrangement rather than "state competition" (See Tung, Internal, supra note 179, at 12, 37, 69 ("The doctrine helped to effect market sharing over corporate law, consistent with state legislatures' general attempts to perpetuate their regulatory control over economic activity within their state borders.")). 338 See Tung, Internal, supra note 179, at 35-6. 339 See Tung, Internal, supra note 179, at 12. 340 Thomas E. Rutledge, To Boldly Go Where You Have Not Been Told You May Go: LLCs, LLPs, and LLLPs in Interstate Transactions, 58 Baylor L. Rev. 205, 213-17 (Winter, 2006).

63 doctrine. A state which has no other connection with the corporation will lose substantial revenues from out-of-state corporate migration. Therefore, the best interest of a charter state is to block or overburden the exit route as much as possible without invoking retaliation by other states.341 Moreover, the balance of interests may indicate a more appropriate forum in migrations which may be the destination state's laws. In fact, the destination state might have a much stronger relationship with the migrating corporation instead of the original incorporation state whose only contact with the corporation might be incorporation related fees.

B. Secondary Charter Market Transactions

There is a diverse variety of organizational forms available to investors ranging from sole proprietorship, general partnership, 342 limited partnership,343 limited liability partnership, limited liability limited partnership, limited liability company,344 business trust (Massachusetts trusts), real estate investment trust, partnership in commendam, corporation,345 professional corporations,346 joint stock associations, the cooperative corporations, closely held corporations,347 non-

341 See Tung, Internal, supra note 179, at 55-8 (discussing the viability of the unilateral action of the states against foreign corporations in the early days of the charter competition). 342 See, the Uniform Partnership Act ( 1997). 343 See, the Uniform Limited Partnership Act (2001 ). 344 See, the Uniform Limited Liability Company Act ( 1996). 345 See, the Model Business Corporation Act (2003) and Delaware General Corporation Law (2007). 346 See, the Model Business Corporation Act's "Professional Corporation Supplement". 347 See, DEL. CODE ANN. TIT. 8, §§ 341-56 (2007). The MBCA's "Statutory Close Corporation Supplement" has been adopted by eighteen states (See Haynsworth, Unified, supra note X at 95 fn. 75).

64 profit corporations, insurance and financial sectors' regulated entities and other entities. The choice on organizational alternatives depend upon concerns relating to establishment and life of the firm, financial rights and governance rights of the investors, capital withdrawal, liquidity of interests, liability, state and federal taxation.348 In addition to organizational forms, jurisdictional choice including includes the 50 states and the District of Columbia is available.349 Consequently, total number of formal business organizations available to investors is equal to the multiplication of the number of the jurisdictions with the number of available organizational forms.

Investors may wish to change the governance structure of the firm after the initial establishment by changing their organizational choice, jurisdictional choice or both. States have a pecuniary interest in initial incorporations and subsequent rechartering transactions.350 Therefore, they prescribe the organizational changes under conversion statutes and the jurisdictional changes in their reincorporation, and domestication statutes. There is a multitude of statutory terms describing the same phenomena. Some states address inbound domestication as "continuance of foreign corporations"351 and outbound domestication as "transfer of domestic corporations"352 Organic changes under the label of reincorporation, domestication and conversion all refer to the phenomenon where the firm changes its initial selection of legal regime.

348 See Palmiter, Corporations, supra note 734, at 19-32. 349 See Macey & Miller, Interest-Group, supra note 3, at 487 (noting that "a decision about where to incorporate involves a comparison oflegal rules across fifty jurisdictions."). 350 See Bebchuk, Desirable Limits, supra note 12, at 1458. 351 WYO. STAT. ANN.§ 17-16-1701, 1710(a) (1997) 352 WYO. STAT. ANN.§ 17-16-1720(a) (1997)

65 Initially, there were no legal provisions governing reincorporation, domestication and conversion. Reincorporations could be established through mergers between domestic and foreign corporations.353 The Delaware codification of 1984 allowed alien (non-U.S.) corporations to domesticate in Delaware354 or temporarily transfer their domicile into Delaware under certain conditions.355

Fifteen years thereafter, Delaware authorized certain Delaware entities to convert into Delaware corporations356 and vice versa.357 The 1984 and 1999 Delaware codifications were not responsive to the corporate law needs of businesses as domestication of foreign unincorporated entities into Delaware was not foreseen and legislated. Legal practitioners created a two step process in order to enable foreign unincorporated entities to become a Delaware corporation: (1)

Domestication into a Delaware unincorporated entity pursuant to Delaware's business organization statutes; (2) Conversion of the Delaware unincorporated entity into a Delaware corporation pursuant to the DGCL. In addition to this complication, the Delaware codification did not permit Delaware corporations to

353 DEL. CODE ANN. § 253(e). Edward P. Welch, Folk on the Delaware General Corporation Law: Fundamentals, 902-904 (2003). 354 Id., at tit. 8, § 388 (1984). 355 DEL. CODE ANN. tit. 8, § 389 (1984). 356 Entities eligible for conversion into Delaware corporations were Delaware LLC, LLP, GP and Delaware statutory trusts before 2005 amendments. See, DEL. CODE ANN. tit. 8, § 265(a) (2005). Some commentators find Delaware's 1999 amendments minor and involving technicality. However, 1999 amendments are made in order to fortify Delaware's position in the corporate charter market. Marcel Kahan & Edward B. Rock, Our Corporate Federalism and the Shape of Corporate Law, UPenn Working Papers No. 50 p. 20 (2004) available at (Last visited Jan. 27, 06). 357 1999 codification inserted the section 265 and 266 into the DGCL. See, for the text of the codification, 72 Del. Laws 123 (1999).

66 withdraw from Delaware by converting into non-Delaware entities.358 This could

only be effectuated through a merger with a foreign shell corporation or a

dissolution following a reincorporation in the foreign jurisdiction.

In 2003, the Committee on Corporate Laws of the Section of Business

Law of the American Bar Association ("ABA") adopted Chapter 9 of the MBCA.

Chapter 9 of the MBCA is a "junction-box statute"359 allowing domestication and

conversion transactions.360 The new chapter liberalized domestication and

conversion procedures permitting all domestic or foreign incorporated or

unincorporated entities convert into an MBCA corporation.361 Further, the MBCA

authorizes domestic corporations to convert into a domestic unincorporated

entity,362 or any kind of foreign entity whether incorporated or not.363 Therefore,

the MBCA eliminated the need for a two step process. The MBCA did not employ

the temporary transfer of alien corporations as in Delaware but adopted a

provision for nonprofit-to-profit-conversion whether foreign or domestic.364

Immediately thereafter, Delaware amended its business organization laws to

358 Delaware corporations could only convert into Delaware LLC, GP, LLP, LLP, LP or a Delaware statutory trust. See, DEL. CODE ANN. tit. 8, § 266(a) (1999). 359 See Marks, Entities, supra note 443at 37. 360 MBCA regulates domestication and conversion in Chapter 9. This regulation was proposed at Changes in the Model Business Corporation Act Relating to Conversion and Domestication- Proposed Amendments Relating to Domestication and Conversion, 56 Bus. LAW 1633 (2001). Final adoption was made at Changes in the Model Business Corporation Act Relating to Conversion and Domestication-Final Adoption, 58 Bus. LAW 219 (2002). 361 MODEL Bus. CORP. ACT§ 9.20(a), 9.50(c), 9.50(d) (2002). 362 Id., at§ 9.50(a) (2002). 363 Id., at § 9.20(b), 9.30(b), 9.50(b) (2002). States may proscribe certain entities to utilize the Chapter 9 of the MBCA. MBCA gives as an example that insurance companies· established on mutuality principles may not be converted. (Id., at § 9.0 I (2002). 364 Id., at§ 9.40 (2002).

67 permit conversion and domestication in 2003.365 Subsequently, Delaware modified its corporation law employing the liberal approach of the MBCA.

Delaware began to explicitly allow conversion and domestication in and out of

Delaware by all kinds of incorporated or unincorporated entities in 2005 by amen d.mg its . corporate l aw. 366

Domestication and conversion statutes are gradually gaining acceptance throughout the U.S. Currently, twenty seven states have promulgated conversion statutes,367 and twenty six states have promulgated domestication statutes.368

Interestingly, most of the states which are expected to engage in charter competition do not possess a domestication statute.369 Twenty-five of the States have only merger statutes available for corporate domicile changes in their statutory books.370

Most of the States employ multiple statutes to govern organizational and jurisdictional changes.371 For instance, Florida has reincorporation through

365 See DEL. CODE ANN. tit. 6, § 213, 216, 219, 903, 905 (2005). 366 Id., at tit. 8, § 265(a), 266(a), 388(a) and 389(a) (2005). 367 Alabama ("Alabama Business Entities Conversion and Merger Act" (Ala. Code §§ I 0-15-1 - 7 (2000))), Alaska, California, Colorado, Delaware, Florida, Georgia, Hawaii, Indiana, Louisiana, Maine, Massachusetts, Minnesota, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma , Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah. 368 Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Louisiana, Maine, Massachusetts, Nebraska, Nevada, New Hampshire, Pennsylvania, South Carolina, South Dakota, Utah, Virginia, Wyoming. 369 New Jersey, Maryland and Texas do not have a domestication statute while Nevada has one. 370 These states are; Arizona, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin. 371 For instance, Arizona, South Dakota, Wyoming.

68 merger,372 domestication,373 redomestication,374 and conversion through merger

statutes.375 Other states also have multiple statutes with the same effect.376 Some jurisdictions allow both domestication and reincorporation transactions.377 These

statutes allow merger and reincorporation simultaneously. Usually, these statutes

are not exclusive.378 Some states do not employ reincorporation or domestication

language but allow relocation.379 Wisconsin prescribes reincorporation,

conversion and reincorporation-conversion in its merger statute.380 Texas

regulates filing and abandonment provisions of mergers and conversions together.381

Still, there are ongoing projects to prepare model acts on organizational and jurisdictional changes. Two draft codes covering inter-entity transactions, the

Model Inter-Entity Transactions Act ("MITA")3 82 and the Model Entity

372 FLA. STAT. ANN.§ 607.1107 (2007). 373 FLA. STAT. ANN.§ 607.1801(2)(a) (2007). 374 FLA. STAT. ANN.§ 607.1107(5) (2007). 375 FLA. STAT. ANN.§§ 607.11101 (2007). Hawaii, Indiana. 376 For instance, Louisiana has a conversion (LA. REV. STAT. ANN. 12:1602(A) (2006)) and merger statute (LA. REV. STAT. ANN. 12:117 (2006)) with the same effect. See for instance, Maine (Domestication, Conversion, Domestication and conversion, Reincorporation through Merger, Reincorporation and conversion); Minnesota (Conversions among corporations-LLC Minn. Stat. § 302A.681 (2006); Mergers between corporations-LLC Minn. Stat.§ 302A.651 (2006)) 377 For instance, Delaware, South Carolina, South Dakota, Texas, Pennsylvania, Utah, Virginia. 378 Colorado explicitly prescribed that its conversion and domestication statutes are not exclusive (COLO. REV. STAT.§ 7-90-205 (2000)). Organizational changes may be effectuated also under the Colorado's merger, share exchange, and redomestication statute (COL. REV. STAT. tit. 7, Art. 111 (2004)). 379 ARK. CODE ANN.§ 4-25-109 (2001) (change of corporate domicile statute). 380 WIS. STAT. ANN.§§ 180.1100, 1101 (2001). 381 TEX. CORPS. & ASS'NS CODE ANN.§§ 10.151-10.156, 10.201-10.203 (2003). 382 The MITA has been prepared by the ABA Committee on Corporate Laws and the Partnership and Unincorporated Associations Committee. See for MITA, Ad Hoc Committee on Entity Rationalization, Proposed Model Inter-Entity Transactions Act, 57 Bus. Law. 1569 (2002); Thomas Geu & Robert Keatinge, The Proposed Inter-Entity Transactions Act: A Proposal to Rationalize Changes in Forms of Business Organizations, 37 Real Prop. Prob. & Tr. J. 385 (2002).

69 Transactions Act ("META"), 383 covering conversions among various entities are in the developmental stage.384 NCCUSL prepared a Uniform Merger and

Conversion Act ("UMCA") to integrate with other subjects: domestication, conversion and reincorporation procedures of the business and non-profit entities an d corporations.· 385

As these statutes are relatively new, both MBCA provisions and Delaware provisions are repetitive and redundant. Domestication procedures set forth in

Subchapter B of the MBCA, non-profit conversion in Subchapter C, foreign nonprofit domestication and conversion in subchapter D, and entity conversion in subchapter E of Chapter 9 are identical and repetitive. Moreover, the procedures brought by the Chapter 9, covering domestication and conversion, and Chapter 11, covering merger and consolidation, of the MBCA are identical. The availability of short form mergers for domestication/reincorporation purposes and statutory procedures and legal implications identical to merger provisions render most of the MBCA and non-MBCA state statutes redundant. The drawbacks of these statutes will diminish as the charter market moves towards a more competitive market structure and additional case law concerning corporate migrations develops.

383 The MET A has been prepared by the National Conference of Commissioners on Uniform State Laws. See for the latest draft of the META, (Last visited: May 1, 2007). 384 It was reported that the MIT A project will be abandoned if the American Bar Association ("ABA") and the National Conference of Commissioners on Uniform State Laws ("NCCUSL") reaches an agreement (See Haynsworth, Unified, supra note X at 88 fn. 50). 385 See Marks, Entities, supra note 443at 37-8.

70 1. Domestication

Domestic corporations are corporations organized in a host state,386 and foreign corporations are business corporations organized in another jurisdiction.387

Historically, domestication statutes were used in order to permit foreign corporations to do business within a state.388 Domesticated corporations continued to be subject to their original-home jurisdiction's corporation laws. As a result, domestication statutes were imposed only on railroad corporations.389 Today, the meaning and content of domestication has evolved. Contemporary domestication is a process to transfer the domicile of a corporate entity whereby a domestic corporation' b ecomes a -I'.'.1oreign • corporation• or vzce• versa. 390

The term domestication has become mainstream statutory term but it has not yet penetrated statutory language universally. For instance, the state of

Delaware employs the term domestication for the relocation of alien (non U.S.) entities,391 and Pennsylvania allows alien corporations to engage in "contingent domestication" and file annually to receive benefits of instate incorporation.392

Some jurisdictions address the transition of domestic corporations into foreign

386 MODEL Bus. CORP. ACT§ 1.40(4) (2002). 387 Id., at § 1.40( 10) (2002); DEL. CODE ANN. tit. 8, § 371 (a) (2005). 388 For instance, Virginia's domestication provisions incorporated licensing of foreign corporations to doing business within Virginia (Note, Compulsory Incorporation and the Power to Tax, 44 Harv. L. Rev. 1111 (May, 1931) (citing VA. CODE ANN. (Michie, 1930) §§ 3820, 3847)). 389 OKLA. STAT. tit. 66, § 164 (2006). 390 See, MODEL Bus. CORP. ACT §§ 9.5 - 9.27 (2003). 391 DEL. CODE ANN. tit. 8, § 388(a)(2) (2007); 392 PA. STAT. ANN. tit. 15 § 162(a), (i), (h) (2001);

71 corporations as "conversion"393 and the language of some state conversion statutes enable effectuation of the domestication purposes.394 Domestication transaction may also be legislated under the "continuance" transaction.395 Not only business corporations, but also non-profit corporations may domesticate in another

Juns, , d'1ct1on. , 396

Some kind of State authorization is necessary for jurisdictional changes.397

Legislative intent can either express as an explicit authorization, legislative silence or absence of an unequivocal prohibition. Most states expressly authorize inbound

(change of foreign corporation to domestic corporation)398 or outbound relocation

(change of domestic corporation to foreign corporation)399 through domestication statutes. Constitutionally, the approval of original jurisdiction is not necessary for

393 HAW. REV. STAT. ANN. § 414-27l(a) (2006) 394 (CAL. CORP. CODE ANN. § 1157 (2002); GA. CODE ANN. § 14-2-1109.3(a) (2006)). 395 WYO. STAT. ANN.§ 17-16-1710(a), (c), (e) (1997). 396 GA. CODE ANN. § 14-3-1106(a) (2006) (based on Model Act); NEB. REV. STAT. ANN. § 21- 19, 161 (2007); PA. STAT. ANN. tit. 15, § 6161 (2001 ); WIS. STAT. ANN.§ 181.1533 (1997); 397 U.S. Supreme Court decided in 1870 that reincorporation takes place only when "the [state] statute evidences a legislative intent to recharter" (See Comment, Multiple, supra note 525, at 1372 (citing Baltimore & 0. R. R. v. Harris, 12 Wall. 65 (U.S. 1870)) [in brackets added]; St. Louis & San Francisco Railway v. James, 161 U.S. 545 (1896); Metro Van & Storage Co. v. Commonwealth, 216 Va. 544, 221 S.E.2d 127 (1976) (deciding under prior VA law that legislative intent is that non-surviving corporations cease to exist)). 398 ARK. CODE ANN. § 4-25-109(a)(2) (2006); ARIZ. REV. STAT. § 10-220 (1994); DEL. CODE ANN. tit. 8, § 388(a)(3) (2007); HAW. REV. STAT. ANN. § 414-271(b) (2006); IDAHO CODE § 30-l- 920(a) (2004); IND. CODE ANN. § 23-l-38.5-4(a) (2006) (Authorizing foreign corporations become domestic corporations); ME. REV. STAT. ANN. tit. 13, § 921(1) (2006); MASS. GEN. LAWS ANN. CH. 1560, § 9.20(a) (2003); PA. STAT. ANN. tit. 15 § 16J(a), 416l(a) (2001); S.C. CODE ANN.§ 33-9- lOO(a) (2004); S.D. CODIFIED LAWS§ 47-lA-920 (2005); UTAH CODE ANN.§ 16-lOa-1533 (1994); VA. CODE ANN. § 13.l-722.2(A) (2002); WYO. STAT. ANN. § 17-16-1701, 1710(a) (1997) (Wyoming adheres inbound domestication as "continuance of foreign corporations"); 399 ARK. CODE ANN. § 4-25-109(a)(l) (2006); ARIZ. REV. STAT. § 10-226(A) (2002) (Any corporation in good standing may domesticate out of state); DEL. CODE ANN. tit. 8, § 252 (2007); HAW. REV. STAT. ANN. § 414-27l(a) (2006); IND. CODE ANN. § 23-l-38.5-4(b) (2006) (Authorizing domestic corporations to turn into foreign corporation); ME. REV. STAT. ANN. tit. 13, § 921(2) (2006); MASS. GEN. LAWS ANN. CH. 1560, § 9.20(b) (2003); PA. STAT. ANN. tit. 15, § 1980 (2001); S.D. CODIFIED LAWS§ 47-lA-921 (2005); VA. CODE ANN.§ 13.l-722.2(B) (2002); WYO. STAT. ANN.§ l 7-16-l 720(a) (1997) (Wyoming adheres outbound domestication as "transfer of domestic corporations");

72 relocation.400 Mutual recognition of the states on both ends of the transaction is required for change of domicile transactions.401 Similar to reincorporations, authorization of the original jurisdiction is required to become a domestic corporation in inbound domestications402 Likewise, authorization of the destination jurisdiction is required for outbound migrations through domestications.403 Furthermore, states preserve application of other business regulations to domestications.404 Regulatory approvals might be required, if any, whether the migration is inbound405 or outbound.406 This provision is to subject domestication to the same regulatory approvals as mergers.407 Thus, domestication, conversion and reincorporation do not allow evasion of regulatory duties or debts.408

Certain types of corporations may not engage in outbound relocations.

Only "[a] domestic corporation not required by law to be a domestic corporation"

400 See Foley, Incorporation, supra note X, at 519, 541 (Clark v. Barnard, 108 U.S. 436, 451-52). 401 Cf. Foley, Incorporation, supra note X, at 519, 541 (Clark v. Barnard, 108 U.S. 436, 451-52). 402 MODEL Bus. CORP. ACT § 9.20(a) (2003); IND. CODE ANN. § 23- l-38.5-4(a) (2006); IDAHO CODE§ 30-1-920(a) (2004); IDAHO CODE§ 30-l-922(1)(c) (2004) (There should be a statement that the corporation is duly authorized in the "articles of domestication"); KY. REV. STAT. ANN.§ 271B.l l-070(l)(a) (2006); ME. REV. STAT. ANN. tit. 13, § 921(1) (2006); MASS. GEN. LAWS ANN. ch. 156D, § 9.20(a) (2003); MICH. COMP. LAWS. ANN. § 450. l 735(a) (2006) (merger statute); MINN. STAT. ANN. § 302A.651(1)(1) (2006) (merger statute); MISS. CODE ANN. § 79-4- l l.02(b) (2007); MONT. REV. CODE ANN.,§ 35-l-819(1)(a) (2005) (merger statute); N.H. REV. STAT. ANN. 293-A:l l.07(a)(l) (2007) (merger statute); S.D. CODIFIED LAWS§§ 47-lA-920, 47- lA-920.1 (2005); 403 MODEL Bus. CORP. ACT§ 9.20(b) (2003); HAW. REV. STAT. ANN. § 414-271(a)(2) (2006); IND. CODE ANN.§ 23-l-38.5-4(b) (2006); ME. REV. STAT. ANN. tit. 13, § 921(2) (2006); MASS. GEN. LAWS ANN. CH. 156D, § 9.20(b) (2003); S.D. CODIFIED LAWS§ 47-IA-920.1 (2005); VA. CODE ANN.§ 13.1-722.2(8) (2002); 404 IND. CODE ANN. § 23- l-38.5-2(a) (2006); S.D. CODIFIED LAWS § 47-1 A-902 (2005); 405 Foreign regulatory approvals should be secured in this case (IDAHO CODE§ 30-1-902 (2004); ). 406 IND. CODE ANN.§ 23-1-38.5-3 (2006); S.D. CODIFIED LAWS§ 47-lA-902 (2005); 407 OFF. COMM. MODEL BUS. CORP. ACT § 9.02 (2003); Idaho Reporter's Comment on IDAHO CODE§ 30-1-902 (2004); 408 Robert C. Art, Conversion and Merger of Disparate Business Entities, 76 Wash. L. Rev. 349, 393 (2001) (discussing conversion).

73 may engage in outbound domestication.409 Domestication statutes may not be used by insurers and financial institutions.410 Special licensed corporations may merge only with similarly licensed corporations.411

Some domestication statutes protect against circumvention of the protections of charitable property via domestication transactions. States are allowed to prohibit the diversion of trust corpus or property of non-profit corporations from their objectives devised for via domestication transactions by the MBCA.412 Another optional MBCA provision prescribes that property held in trust or for charitable purposes may not be diverted from the objects for which it was donated, granted, or devised, through domestication or conversion statutes unless and until the eligible entity obtains an order of the circuit court specifying the disposition of the property to the extent required.413 However, these protections are not necessary. Equity courts can also protect the corpus of trusts and property of non-profit corporations without the aid of corporate law.

2. Reincorporation

409 VA. CODE ANN.§ 13.1-722.2(8) (2002); 410 WYO. STAT. ANN.§ 17-16-1701 (1997). General domestication statute "may not be used to effect a transaction that converts an insurance company organized on the mutual principle to one organized on a stock-share basis." (S.D. CODIFIED LAWS § 47-1 A-90 I (2005)). 411 VA. CODE ANN.§§ 13.l-620, 716(F)(2) (2005); 412 MODEL BUS. CORP. ACT§ 9.02(b) (2003). 413 S.D. CODIFIED LAWS§ 47-lA-902 (2005);

74 The term reincorporation is not clarified although it was heavily used in tax literature in the 1960s.414 There is also no entry for domestication in the

Black's Law Dictionary's gth edition. Reincorporation is a transaction to change the domicile state of the corporation. Reincorporation is effectuated through establishment of a subsidiary with an identical corporate name in the destination jurisdiction. The parent merges with the subsidiary, and the parent disappears.415

The famous state competition debate's terminology focused on the reincorporation term.416 Until now, empirical studies evaluated the impact of reincorporation transactions on shareholder wealth.417 However, the term reincorporation does not appear in the statutory code books of thirty four states.418

414 See Norman Herbert Lane, The Reincorporation Game: Have the Ground Rules Really Changed?, 77 Harv. L. Rev. 1218, 1229 (May, 1964). 415 See See Dodd & Leftwich, supra note 14 263; Romano, Product, supra note 3, at 248, 268; Clark, Corporate Law, supra note X, at 416-17; Bebchuk, Desirable Limits, supra note 12, at 1458. It should be noted that domestication statutes were not in effect when these works have been published. Scholars cite merger statutes in connection with their explanation of reincorporation transactions (See Bebchuk, Desirable Limits, supra note 12, at 1449. See Bebchuk, Desirable Limits, supra note 12, at 1460 (citing merger statutes, i.e. Del. Code Ann. tit. 8, 241, 251 (2003), to show that reincorporation may be initiated by the management); Symposium Norms & Corporate Law: Marcel Kahan, The Limited Significance of Norms for Corporate Governance, 149 U. Pa. L. Rev. 1869, 1878 fn. 35 (June, 2001) (June, 2001) (reincorporation decision needs board approval through DGCL § 25l(b)). Academic literature continued to focus on reincorporation after the promulgation of domestication and conversion statutes (See Subramanian, Incorporation Choice, supra note 105, at 1803; Barzuza, Price Considerations, supra note 44, at 140; Heron & Lewellen, Reincorporation, supra note 13, at 549; Bratton & McCahery, Regulation, supra note 11 at X. 416 Although the roots of the state competition debate goes back to the turn of the century, the academic debate on the role of the state competition debate started with the seminal writings of William Cary and Ralph Winter representing two distinct schools of thought. Scores of law review articles had been published on the topic since then. See, William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 Yale L.J. 663 (1973-1974); Ralph K. Winter, Jr., State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. Legal Stud. 251 (1977). 417 See Bebchuk, Desirable Limits, supra note 12, at 1449. See Bebchuk, Desirable Limits, supra note 12, at 1460 (citing merger statutes, i.e. Del. Code Ann. tit. 8, 241, 251 (2003), to show that reincorporation may be initiated by the management); Symposium Norms & Corporate Law: Marcel Kahan, The Limited Significance of Norms for Corporate Governance, 149 U. Pa. L. Rev. 1869, 1878 fn. 35 (June, 2001) (reincorporation decision needs board approval through DGCL § 25l(b)). 418 Alaska, California, Colorado, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Mexico, Nmih 75 Generally, reincorporation is employed by the state statutory code to articulate conversion of special chartered corporations to corporations prescribed under the general corporation laws and a few other immaterial issues in corporate law.419

Other usages of statutory reincorporation include the reincorporation of certain state government ent1t1es,• • 420 regu lat1on . o f.msurance, 421 b an k.mg 422 an d re 11g1ous.. or other entities.423 Reincorporation is not a mainstream corporate law term in

Carolina, North Dakota, Ohio, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, West Virginia, Wisconsin and Wyoming. 419 CONN. GEN. STAT. § 33-913 (1996) (Conversion of special chartered corporations to domestic business corporations); CONN. GEN. STAT. § 33-1203 (1997) (Conversion of special chartered corporations to domestic non-stock corporations); D. C. CODE ANN. § 29-101.141 (1992) (Reincorporation or incorporation of existing corporations); FLA. STAT. ANN. ANN. § 617.0901 (1990) (Conversion of special chartered corporations to domestic corporations); KY. REV. STAT. ANN. § 271B. l 4-225 (1992) (Relationship between reincorporation and administrative dissolution or revocation of business corporations); KY. REV. STAT. ANN.§ 273.3184 (1992) (Relationship between reincorporation and administrative dissolution or revocation of non-stock and non-profit corporations); LA. REV. STAT. ANN.§ 12:165 (1999) (Reincorporation (Conversion) of non-profit corporations to business corporations); NEV. REV. STAT. ANN.§ 78.725 (2003) (reincorporation of special chartered corporations in existence on April l, 1925); N.J. STAT. ANN.§ 14A:l-4 (1968) (Reincorporation of special chartered corporations under general corporation law); N .J. STAT. ANN. § I 5A: 1-4 (1983) (Reincorporation of special chartered non-stock corporation by waiving exemptions and privileges granted therein). 420 ALA. CODE§ 4-3-41 (1991) (Reincorporation of airport authorities); ALA. CODE§ l l-86A-6 (2000) (Reincorporation of park and recreation authorities and boards); ALA. CODE § l l-92A-6 (1999) (Reincorporation of county industrial development authorities); ALA. CODE§ 22-21-340 (1982) (Reincorporation of health care authorities); ARIZ. REV. STAT. § 9-103 (1972) (Reincorporation of municipalities); MICH. COMP. LAWS. ANN.§ 113.1 (1998) (Reincorporation of fourth class cities); MICH. COMP. LAWS. ANN.§ 124.465 (1986) (Relationship between collective bargaining agreements and reincorporation of public transportation system); N. Y. BEN. ORD. LAW §§ 1600-1608(1973) (Reincorporation of special villages). 421 ARK. CODE ANN. § 23-71-104 (1959) (Reincorporation prohibition for stipulated premium insurers); D. C. CODE ANN. § 31-4418 (1997) (Reincorporation of life domestic life insurance companies); D. C. CODE ANN. § 31-4418 (1997) (Reincorporation of insurance corporation created by special act of Congress out of D.C.); MASS. GEN. LAWS ANN. ch. 175, § 56 (1985) (reincorporation of fraternal benefit societies); MICH. COMP. LAWS. ANN. § 124.465 ( 1956) (Reincorporation of special chartered insurers under the general act); OKLA. STAT. tit. 36, §§ 2408, 2511 (2006) (Reincorporation of mutual benefit associations and limited stock life, accident and health insurers); PA. STAT. ANN. tit. 40, § 623.2 (2006) (Reincorporation of limited life insurance companies); YA. CODE ANN. § 38.2-4136 ( 1986) (Reincorporation of fraternal benefit societies). 422 WASH. REV. CODE ANN.§ 30.38.020 (2007) (Reincorporation of out-of-state banks with host branches in state). 423 DEL. CODE ANN. tit. 3, § 8506 (2007) (Reincorporation of foreign agricultural associations); D. C. CODE ANN. § 29-804 (1981) (Reincorporation of charitable, educational, and religious associations); MICH. COMP. LAWS. ANN.§ 456.19, 457.267 (1917) (Reincorporation of cemetery 76 Delaware. Reincorporation is used with regard to the reincorporation of foreign

agricultural associations in Delaware.424 The Delaware Chancery Court uses the

term "redomestication" for reincorporations.425

Although reincorporation is not a statutory term for jurisdictional changes,

change of domicile transactions can be effectuated under the state "merger or

share exchange with foreign corporations" statutes.426 Similar to domestications,

associations, order of the eastern star); MICH. COMP. LAWS. ANN.§§ 458.30, 52, 72, 90, 108, 212, 408, 429, 459 (1909) (Reincorporation of Methodist Episcopal Churches, Wesleyan Methodist Churches, Methodist Protestant Churches, Free Methodist Churches, Baptist Churches, Presbyterian Churches, Reformed Protestant Dutch Churches, Christian Reformed Churches and Evangelical Churches); MINN. STAT. ANN. ANN.§ 315.22 (1985) (reincorporation of church or religious society); N.J. STAT. ANN. §§ 16:3-6, 11-21, 15-6, 15A-6, 16-2, 17-12 (2007) (Reincorporation of Church of Christ, Scientist, United Presbyterian Church, Roman Catholic Church, Russian Orthodox Church, Ruthenian Catholic Church and Spiritualist Churches or Congregations); WASH. REV. CODE ANN. § 24.20.040 (2007) (Reincorporation of nonprofit fraternal societies); N.J. STAT. ANN. § 34:17-17 (2007) (Reincorporation of trade unions);N.J. STAT. ANN. ANN.§ 43:17-4 (1996) (Reincorporation of firemen's relief associations); N.Y. BEN. ORD. LAW§ 11(1909) (Reincorporation of joint corporations (benevolent or fraternal orders); N.Y. REL CORP. LAW§§ 108, 169-e, 270, 276, 342, 427, 453 (1990) (Reincorporation of Churches of the Orthodox Church of America, the Ukranian Orthodox Church of America, Holy Ukrainian Autocephalic Orthodox Church in Exile, Nazarene, Byelorussian Autocephalic Church in America, Spiritualist Churches, Assemblies of God Churches and Coptic 01ihodox Churches). 424 DEL. CODE ANN. tit. 3, § 8506 (2007). 425 See Unreported Cases, Rohe v. Reliance Training Network, Inc., 27 Del. J. Corp. L. 410, 435 (2002) (reporting Rohe v. Reliance Training Network, Inc., No. 17,992 (Del. Ch. July 21, 2000) (Strine, Vice Chancellor)) ("it is reasonable to assume that they would have examined closely whether redomestication into Delaware would affect that deal. After all, there was no purpose to the merger except to ensure that RTN would be governed by Delaware, rather than Texas, corporation law."); Coates, supra note I 57, at 241. 426 ALA. CODE§ 10-28-11.07 (2006); ARIZ. REV. STAT. § l 0-1007 (1994); CAL. CORP. CODE ANN. § 1108 (2007); D. c. CODE ANN. § 29-101.7 l(a) (2006); DEL. CODE ANN. tit. 8, § 390(a) (2007); 805 ILL. COMP. STAT. 5/11.35 (2007); IND. CODE ANN. § 23-l-40-7(a) (2006); IOWA CODE § 490.1102( 1) (2002); IDAHO CODE § 30-1-1102( 1) (2004) (Domestic and foreign corporations may merge in domestic corporations); IDAHO CODE § 30-1-1102(2) (2004) (Domestic and foreign corporations may merge in foreign corporations); CONN. GEN. STAT. § 33-815(a) (2006) (Merger of domestic and foreign corporations into domestic or foreign corporations); HAW. REV. STAT. ANN. § 414-311.6(a) (2006) (Merger of domestic and foreign corporations into domestic or foreign corporations); GA. CODE ANN. § 14-2-1107(a) (2006) (based on MODEL BUS. CORP. ACT § 11.07 (2003)); KAN. CORP. CODE ANN. §§ l 7-6702(a), 6706 (2006) (merger between domestic and foreign stock and non-stock corporations); KY. REV. STAT. ANN.§ 2718.11-070 (2006); ME. REV. STAT. ANN. tit. 13, § 1102(2) (2006) (Merger of domestic and foreign business entities); MD. CODE ANN., CORPS. & ASS'NS § 3-102(a)(l) (2006); MICH. COMP. LAWS. ANN. §§ 450.1706, 1735 (2006); MINN. STAT. ANN. § 302A.651 (2006); MISS. CODE ANN. §§ 79-4-l l.02(a) (2007); Mo. REV. STAT.§ 351.458 (2007); MONT. REV. CODE ANN.,§ 35-1-819 (2005); NEB. REV. STAT. ANN. § 21-20,134(1) (2007); N.H. REV. STAT. ANN. 293-A:l l.07 (2007); N.J. STAT. ANN.§ 14A:10-7 (1973); N.M. STAT. ANN.§ 53-14-7 (2007); N.Y. Bus. CORP. LAW§ 907 (1997); N.C. GEN. STAT.

77 authorization of the original jurisdiction is required to become a domestic corporation in reincorporations.427 Likewise, authorization of the destination jurisdiction is required for outbound migrations reincorporations.428

Short form mergers can also be used to effectuate corporate migration. The domestication transactions authorized under Chapter 9 of the MBCA "may be effectuated indirectly under part 11 by just establishing a wholly-owned subsidiary of the desired type and then merging into it."429 Delaware's merger of

§ 55-11-07 (2005); N. D. CENT. CODE§ 10-19.l-96(1)(c) (1999) (Merger between domestic corporations and foreign corporations/LLCs); OHIO REV. CODE ANN.§ l 701.79(A) (2006); OKLA. STAT. tit. 18, § 1082(A) (1998); OR. REV. STAT. § 60.501 (1987); R.I. GEN. LAWS§ 7-l.2- 1006(a) (2004); S.C. CODE ANN.§ 33-11-107 (1988); PA. STAT. ANN. tit. 15, § 1921 (1990); S.D. CODIFIED LAWS § 47-lA-1102.1 (2005); TENN. CODE ANN.§ 48-21-109 (1994); TEX. CORPS. & ASS'NS CODE ANN.§ 10.00l(d) (2003); UTAH CODE ANN.§ 16-lOa-1107(1) (1992); VT. STAT. ANN. tit. llA, § I 1.07 (1993); V. I. CORPS. & ASS'NS CODE ANN.§ 252(a) (2003); VA. CODE ANN. § 13.l-716(A) (2005); WASH. REV. CODE ANN.§ 238.11.070 (1989); W. VA. CODE ANN.§ 31D- ll-1102(a) (2002); WIS. STAT. ANN.§ 180.1100(3), 1101(1) (2001); WYO. STAT. ANN.§ 17-16- 1 I 07(a) (1989); 427 805 ILL. COMP. STAT. 5/11.35 (2007); IND. CODE ANN. § 23-1-40-7(a)(l) (2006); ALA. CODE § 10-28-l l.07(a) (2006); IDAHO CODE § 30-1-1102(1) (2004); CONN. GEN. STAT. § 33-815(b) (2006); FLA. STAT. ANN. § 607.1107(l)(a) (2007); GA. CODE ANN. § 14-2-l 107(a)(l) (2006); KAN. CORP. CODE ANN. § 17-6702(1) (2006); NEB. REV. STAT. ANN. § 21-20,134(l)(a) (2007); N.M. STAT. ANN.§ 53-14-7(A) (1983); N.C. GEN. STAT.§ 55-ll-07(a)(l) (2005); OKLA. STAT. tit. 18, § 1082(A) (1998); OR. REV. STAT. § 60.50l(l)(a) (1987); R.I. GEN. LAWS§ 7-l.2-1006(a) (2004); S.C. CODE ANN.§ 33-ll-107(a)(l) (1988); TENN. CODE ANN.§ 48-21-109(a)(l) (1994); TEX. CORPS. & ASS'NS CODE ANN.§ 10.00l(d)(l) (2003); UTAH CODE ANN.§ 16-10a-l 107(l)(a) (1992); VT. STAT. ANN. tit. I IA,§ 11.07(a)(l)(1993); WASH. REV. CODE ANN.§ 238. I l.070(l)(a) (1989); W. VA. CODE ANN.§ 31D-ll-1102(b)(l) (2002); WYO. STAT. ANN.§ 17-16-1107(a)(i) (1989); 428 Colorado COLO. REV. STAT.§ 7-l l l-107(l)(a) (2003); DEL. CODE ANN. tit. 8, § 252(a) (2007); IDAHO CODE § 30-1-1102(2) (2004); ME. REV. STAT. ANN. tit. 13, § 1102(2) (2006); TEX. CORPS. & ASS'NS CODE ANN. § 10.00l(d)(l) (2003) (in addition organic documents of the corporation shall permit); VA. CODE ANN. § 13.1-716(8) (2005); 429 OFF. COMM. MODEL Bus. CORP. ACT§ 9.02.; ME. REV. STAT. ANN. tit. 13, § 1105 (2006); MASS. GEN. LAWS ANN. CH. 1560, § 11.05 (2003); DEL. CODE ANN. tit. 8, § 253(a) (2007); HAW. REV. STAT. ANN. § 414-318 (2006); IOWA CODE § 490.1105 (2002); MINN. STAT. ANN. § 302A.621 (2006); MISS. CODE ANN. § 79-4-11.05 (2007); N.J. STAT. ANN. §§ 14A:10-7(4), 14A:10-5.l (1988); N.M. STAT. ANN. § 53-14-5 (2001); N.Y. Bus. CORP. LAW§ 907(c) (1997); N. D. CENT. CODE§ 10-19.1-100 (2001); OHIO REV. CODE ANN.§§ 1701.801, 1701.802 (1986); OKLA. STAT. tit. 18, § 1083 (1998); S.C. CODE ANN.§ 33-11-104 (1988); S.D. CODIFIED LAWS § 47-lA-1105 (2005); TENN. CODE ANN.§ 48-21-105 (1996); TEX. CORPS. & ASS'NS CODE ANN.§ 10.006 (2003); UTAH CODE ANN.§ 16-lOa-1104 (1992);

INTRODUCTION ...... 1

!:. THE DEVELOPMENT OF THE ACADEMIC DEBATE ...... 4

(1) FACTUAL AGREEMENT BETWEEN THE SCHOOLS OF THOUGHT ...... 4 (2) THE ROLE OF IDEOLOGY IN THE DEBATE ...... 5

II. THE CONFLICT BETWEEN THE MANAGERS AND THE SHAREHOLDERS ...... 6

(1) GOVERNMENT DISCIPLINE SCHOOL (RACE TO THE BOTTOM) ...... 6 (2) MARKET-DISCIPLINE SCHOOL (RACE TO THE TOP) ...... 13 (3) CRITICISM OF THE MARKET-DISCIPLINE SCHOOL ...... 15 ( 4) THE ROLE OF FRANCHISE TAXES ...... 18 (A) FRANCHISE TAX MAXIMIZATION OR OPTIMIZATION ...... 18 (B) CAPTIVITY THEORY (BONDING THEORY) ...... 20 (5) INVESTOR ABILITY TO ASSESS THE VALUE OF CORPORATE LAW ...... 26 (6) ACADEMIC MODERATION ...... 29

III. DUAL THREAT MODEL ...... 30

( 1) FEDERALIZATION RISK ...... 31 (2) RIVAL STATES' IMPACT ...... :.36 ill INTEREST GROUP THEORY ...... 37 ffi DENSITY-DEPENDENT VIEW (NETWORK-EFFECTS THEORY) ...... 41

.(fil CORPORATE LOCK-IN IN DELAWARE ...... 45

(1) FIRST-MOVERADVANTAGE ...... 45 (2) PROPRIETARY LOCK-IN ...... 46 (3) BURDENED CORPORATE MOBILITY ...... 48 ( 4) STATE-SPECIFIC INDOCTRINATION ...... 51

VII. ACADEMIC INFLUENCE IN CORPORATE LAW ...... 52

(1) CORPORATE LAW ACADEMIA'S ROLE ...... 52 (2) THE ORIGINS OF THE SARBANES-OXLEY ACT ...... 54

CONCLUSION ...... 56 11 DOCTRINAL FOUNDATIONS OF THE CHARTER MARKET

KAGAN KOCAOGLU

INTRODUCTION

This paper examines the development of academic thought on the dynamics of the charter market. It is natural that the academic opinions on corporations and securities differ in a large country like the U.S. 1 Accordingly, the role of the states in corporate law regulation has been debated in the U.S. for more than three decades. Much has been written on state competition in corporate laws. 2 The efficiency of state competition,3 corporate jurisdictional choices,4 and the state of Delaware's role on corporate law production, are the subjects of the controversy.

Historically, the first school of thought on regulatory competition emerged under the banner of government discipline demanding the restriction of state competition in the charter market. This line of thought has been called a "race to the bottom", "stockholder-exploitation

1 See Richard W. Jennings, The Role of the States in Corporate Regulation and Investor Protection, 23 LA w & CONTEMP. PROBS. 193, 230 (1958). 2 See, Kagan Kocaoglu (Cahn Kojaolu), A Comparative Bibliography: Regulatory Competition in Corporate Law, (Georgetown University Law Center Working Paper) (March, 2008) available at (Last visited March 22, 2008) (delineates the academic works on regulatory competition on corporate law); Marcel Kahan & Edward Rock, Symbiotic Federalism and the Structure of Corporate Law, 58 V AND. L. REV. 1573, 1575 (October, 2005) (noting that the academic literature on state competition in the charter market is continuously growing); Ehud Kamar, Beyond Competition for Incorporations, 94 GEO. L.J. 1725, 1726-7 (2006) (pointing that "[n ]early half a century of legal scholarship has produced scores of articles explaining state corporate laws in the United States as products of just such competition."). 3 See Mary E. Kostel, A Public Choice Perspective on the Debate over Federal Versus State Corporate Law, 79 VA. L. REV. 2129, 2131 (Nov., 1993) (indicating that the issues in the debate are mechanics of state competition, its impact and efficiency). 4 See Robert Daines, The Incorporation Choices of !PO Firms, 77 N.Y.U.L. Rev. 1559, 1587 (Dec., 2002) (stating that "question of which laws attract or repel firms is at the center of the state-competition debate).

1 hypotheses,"5 "reformists,"6 "traditional view"7 or managerialist view. 8 The government- discipline school assumes that the state competition laws produce inefficient corporate law and insufficient investor protection.9 The government-discipline school has distinct philosophical roots. Many proponents of the government-discipline school are against unlimited contractual freedom. 10 The market-discipline school responded to the propositions of the government- discipline school, postulating that state competition results in efficient and optimum corporate law provisions.11 The market-discipline school has been named as a "cost-avoidance theory", 12

"corporate federalists", 13 and contractual views. 14 Complementary theories assert that corporate law is a function of existing interest groups, 15 or of the density of the incorporations in a given jurisdiction.16 Several other intermediary theories have also emerged. The absence of

5 See Peter Dodd & Richard Leftwich, The Market for Corporate Charters: "Unhealthy Competition" Versus Federal Regulation, 53 J. Bus. 259, 266 (1980). 6 See Jonathan R. Macey & Geoffrey P. Miller, Toward an Interest-Group Theory of Delaware Corporate Law, 65 TEX. L. REV. 469, 469 (1987); Demetrios G. Kaouris, Is Delaware Still a Haven for Incorporation?, 20 DEL. J. CORP. L. 965, 967-68 (1995). 7 See Macey & Miller, !GT, supra note 6, at 470. 8 See William W. Bratton, The New Economic Theory of the Firm: Critical Perspectives from History, 41 STAN. L. REV. 1471, 1472 (1989). 9 See William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 YALE L.J. 663, 668 (1973- 1974) (discussing the lax standards caused by the state competition in corporate laws). 10 See Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 HARV. L. REV. 1435, 1497 (1992) (indicating that both state competition and contractual freedom creates socially undesirable rules). 11 See Dodd & Leftwich, supra note 5, at 260-61; Frank H. Easterbrook, Managers' Discretion and Investors' Welfare: Theories and Evidence, 9 DEL. J. CORP. L. 540, 549-50 (1984); Ralph K. Winter, Jr., Private Goals and Competition among State Legal Systems, 6 HARV. J. L. & PUB. POL'Y 127, 128-9 (1982-1983) (stating that "[a]s long as Delaware is leading, there will be a race to the top."). 12 See Dodd & Leftwich, supra note 5, at 261. 13 See Macey & Miller, !GT, supra note 6, at 470; Kaouris, supra note 6, at 967-68. 14 See Bratton, History, supra note 8, at 1472 (indicating that academic corporate law is composed ofmanagerialist and contractual views.). 15 See Macey & Miller, JGT, supra note 6, at 469 et seq .(indicating that " neither theory is as robust as the interest- group theory"). 16 See Michael Klausner, Corporations, Corporate Law, and Networks of Contracts, 81 VA. L. REV. 757, 757 et seq. (1995)

2 competition among the states can be signified from a competition analysis. The leading jurisdiction is just a simple monopoly from this standpoint. 17 Issue-by-issue analysis indicates that state competition leads to inefficiency in conflict-of-interest transactions. 18

This study analyzes existing models, their contribution to the positive law and endeavors to increase the understanding of the charter market by its focus on the economic and legal entry- barriers in the charter market. Part I explains the development of the academic debate. The role of ideology in the development of the ongoing debate is questioned. Part II analyzes the discussion among the government-discipline school, the market-oriented school and moderate views. This part focuses on these schools' basic philosophical beliefs, the role of franchise taxes in the charter market, captivity theory, and investor ability to price corporate law. Part III examines the dual-threat model in detail. The impact of federalization risk and the rival state competition on corporate law are highlighted. Parts IV and V underline and criticize the complementary theories on regulatory competition in corporate law. Interest-group theory and the density-dependent view are evaluated in these parts in connection with earlier theories. Part

VI attempts to develop a model for proprietary lock-in in the charter market. Historical investigation in this part establishes that Delaware has a derivative first-mover advantage in the charter market. Sunk costs in a specific state law, coupled with exit barriers and state-specific legal teaching, cause a lock-in in the dominant jurisdiction. Finally, Part VII evaluates the influence of corporate law academicians on the positive law. This part traces the roots of the

Sarbanes-Oxley Act to the academic debate in the mid- l 970s.

17 See Marcel Kahan & Ehud Kamar, The Myth ofState Competition in Corporate Law, 55 STAN. L. REV. 679, 679 et seq. (2002). 18 See Bebchuk, Desirable, supra note 10, at 1440 (State competition does not lead to desirable results when interests of shareholders and management conflict.)

3 U.S. corporate regulation is a mix of international, federal and state determinants, as will

be discussed further. The American regulatory regime does not entirely depend upon a single

consistent ideology or academic school. Moreover, theory is not directly applicable to the real

19 world. Prominent scholars having firsthand knowledge of the state corporate law drafting process pointed out that states do not take into account academic considerations.20 Nonetheless, each theory gives insight to one facet of the corporate law regime, whereas no theory can completely explain the role of regulatory competition in corporate law. 21

I. The Development of the Academic Debate

(1) Factual Agreement between the Schools of Thought

Regulatory competition theory is polarized on the corporate law among schools of thought. Nonetheless, there is uniformity among the fronts regarding factual situations. Different schools of thought observe the same factual situation and reach different conclusions. 22 First and

19 See Mancur Olson, Jr., The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government, 59 AM. ECON. REV. 479, 487 (May, 1969) (noting that "[i]t is rarely appropriate to go directly from theory to policy"). 20 See, Lawrence A. Hamermesh, The Policy Foundations of Delaware Corporate Law, I 06 CO LUM. L. REV. 1749 (2006). 21 See Macey & Miller, !GT, supra note 6, at 509 (indicating that "[n]one of the existing theories, including ours, provides a complete account of Delaware law"). 22 See Roberta Romano, Law as a Product: Some Pieces ofthe Incorporation Puzzle, 1 J.L. ECON. & ORG. 225, 225 (Autumn, 1985) (stating that both the race to the top and race to the bottom schools talk about the same "competitive forces" of the market). See for a tabulation of the agreements and disagreements between the market discipline and the government discipline schools, Bratton & McCahery, New, supra note 25at 220 Tb. 1.

4 foremost, they assume uniformity among state laws.23 The substance of corporate law affects a company's value and a state's charter market share. They assume a rational firm actively

shopping corporate laws nationwide. Incorporation choice and business operations choices are

separate and therefore do not affect each other. 24 Both the government-discipline and market-

25 oriented schools concede that local governments compete vigorously for the production factors,

and until recently it was accepted that local governments compete to capture incorporation-

related fees. 26 However, this view is justifiably contested.27

(2) The Role of Ideology in the Debate

Scholarly views on the state competition debate stem largely from personal views on the

role of the government and the corporation. 28 Participants of the state competition debate assess

the historical development, corporate theory and functioning of the charter market from a

23 See William J. Camey, Explaining the Shape of Corporate Law: The Role of Competition, 18 MGMT. Des. ECON. 615 (1997) (citing Romano, Product, supra note 22, at 229 [citations omitted]). 24 See Daines, Choice, supra note 4, at 1565-1566. 25 See William W. Bratton & Joseph A. McCathery, The New Economics of Jurisdictional Competition: Devolutionary Federalism in a Second-Best World, 86 GEO. L.J. 201, 217 (1997-1998). 26 See Daines, Choice, supra note 4, at 1565-1566. 27 See Marcel Kahan & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 STAN. L. REV. 679, 679 et seq. (2002). 28 In fact, most commentators indicate that the current academic debate is results from the differences to the world view rather than impending corporate law issues (See, Seymour J. Rubin, Corporations and Society: The Remedy of Federal and International Incorporation, 23 AM. U. L. REV. 263, 288 (1969) (indicating that "[a] substantial problem is the divisiveness of the case for federal chartering"); Roberta Romano, Metapolitics and Corporate Law Reform, 36 STAN. L. REV. 923, 25 (1984) (stating that "many controversies over corporate law reform can be explained as pertaining to fundamental political disagreements")); Ian M. Ramsay, Company Law and the Economics ofFederalism, 19 FED. L. REV. 169, 197-98 (1990).

5 different perspective.29 Neither front has yet persuaded the other as differences in a world view complicate reconciliation efforts between schools of thought. Thus, the resolution of the debate on federalism is not in sight,30 and Delaware's role in corporate law has become the Rorschach test of corporate law.31 The discussion is not likely to fade, 32 and regulatory competition issues still prove to be a fertile setting for academic writing. A pragmatic position rather than an ideological one is much more realistic as the dynamics of the charter market constitute a hybrid between the market and government. Theories applicable to markets or governments alone might not be able to evaluate the charter market as it is hard to find a pure market or government similar to the ones in theories.

II. The Conflict between the Managers and the Shareholders

(1) Government Discipline School (Race to the Bottom)

29 See Edward S. Herman, The Limits of the Market as a Discipline in Corporate Governance, 9 DEL. J. CORP. L. 530, 530 et seq. (Spring, 1985). 30 See Kostel, Public Choice, supra note 3, at 2129. 31 Hermann Rorschach developed the Rorschach Test after recognizing that individuals reacted to identical figures differently because of differences in their personal paradigms, experiences and personalities. See for more information, HERMANN RORSCHACH, RORSCHACH TEST (Hans Huber Verlag: 1994). 32 Some scholars predicted that Professor Cary's thesis, the government discipline thesis, will continue to be debated for decades (See John C. Coffee, Jr., "Comment", in "The Most-Cited Articles from the Yale Law Journal", (Fred R. Shapiro eds.) 100 YALE L.J. 1449, 1500 (1991)).

6 Academic views on state competition have been bipolarized.33 The government-oriented school labels the state competition in corporate laws phenomenon as "survival of the unfit"34

35 36 37 "charter-peddling" , "race of laxity" , "the deterioration of state corporate law standards" ,

38 39 40 "atrophy of state corporate law", "[t]he Delaware [c ]ontroversy" , "Gresham's law",

41 42 43 "progressive permissiveness", "the level of the lowest", "lowest common denominator" ,

"regulatory meltdown"44 and "ruinous competition".45 The charters produced through state competition are named as "charters for sale," and a corporation incorporated in one state and doing business in another is named a "tramp corporation."46 However, these labels are largely

33 Reuschlein classifies the schools into two: Industrialists asserting that the solution is in antitrust reforms and anti- industrialists defending a control system over the corporations (See Harold Gill Reuschlein, Federalization--Design for Corporate Reform in a National Economy, 91 U. PA. L. REV. 91, 101 (1942-1943)). 34 See Raymond T. Zillmer, State Laws: Survival of the Unfit, 62 U. PA. L. REV. 509, 509 (1913-1914). 35 See Edward G. Jennings, Federal Incorporation or Licensing of Interstate Corporate Business, 23 MINN. L. REV. 710, 711 (1938-1939). 36 See Liggett v. Lee, 288 U.S. 517, 559 (1933) [J. Brandeis' dissent]; Kenneth K. Luce, Trends in Modern Corporation Legislation, 50 MICH. L. REV. 1291, 1297 (1951-1952). 37 See Cary, Reflections, supra note 9, at 701. 38 See Joel Seligman, The New Corporate Law, 59 BROOK. L. REV. 1, 1 (] 993). 39 See Hyman, Controversy, supra note 39, at 368. 40 See Cary, Reflections, supra note 9, at 698; Henning, Chaos, supra note X, at 363 (agreeing with Cary); Schwartz, Introduction, supra note 73, at 75 (citing Ralph Nader, The Case for Federal Incorporation, at Oct. 30-31, 1971 (presentation to Conference on Corporate Accountability)) (stating that ""Nader has described as a version of Gresham's Law, with the bad law driving out the good.""). 41 See Allen Hyman, The Delaware Controversy - The Legal Debate, 4 DEL. J. CORP. L. 368, 371 (1978-1979) (quoting from Professor Jacoby at Wall Street Journal, Jan. 10, 1977, at 14, col. 6). 42 See Zillmer, Unfit, supra note 34, at 514. 43 See Ramsay, Federalism, supra note 28 at 199 (quoting from EXPLANATORY MEMORANDUM AUSTRALIAN CORPORATIONS ACT OF 2001 1 6). 44 See David Charny, Competition among Jurisdictions in Formulating Corporate Law Rules: An American Perspective on the "Race to the Bottom" in the European Communities, 32 HARV. INT'L. L.J. 423, 423 (1991) [citations omittedJ. 45 See Zillmer, Unfit, supra note 34, at 512. 46 See Comment, Foreign Corporations - State Boundaries for National Business, 59 YALE L. J. 737, 737-8 (Mar., 1950).

7 47 misleading. It should be noted that the shareholder exploitation-government discipline theory based on the Managerialist School of Economics and the Berle-Means Theory,48 rather than

Marxist ideology.

We can trace the idea of race to the bottom back almost two centuries back. Chief Justice

Taney's Supreme Court foresaw in 1839 that regulatory competition would impair public policies and that states would lose their control over charters.49 The Court denounced unrestricted state competition whereby state restrictions on corporations were circumvented by forum shopping. 5° Committee on Uniform Incorporation Law (of then Commissioners on

Uniform State Laws) noted in 1904 that all the states along with Washington, D.C. competed for franchise revenues. 51 This committee further found that the system in 1904 protected fraud at maximum and honest business at minimum while permitting smaller states to generate revenue for their officials. 52

47 See Bratton & McCahery, New, supra note 25 at 262 (finding that the race to the bottom and the race to the top "labels are misleading"). 48 See Camey, Competition, supra note 23, at 612 49 See Bank ofAugusta v. Earle, 38 U.S. 519, 586-7 (1839) (stating that "[t]he clause of the Constitution referred to certainly never intended to give to the citizens of each state the privileges of citizens in the several states, and at the same time to exempt them from the liabilities which the exercise of such privileges would bring upon individuals who were citizens of the state ...... Besides, it would deprive every state of all control over the extent of corporate franchises proper to be granted in the state; and corporations would be chartered in one, to carry on their operations in another. It is impossible upon any sound principle to give such a construction to the article in question."). 50 See Gregory A. Mark, The Court and the Corporation: Jurisprudence, Localism, and Federalism, 1997 SUP. Cr. REV. 403, 436 (1997) (stating that Chief Justice Taney's articulation rejected shopping for corporate charters). 51 See Zillmer, Unfit, supra note 34, at 511. 52 See Zillmer, Unfit, supra note 34, at 512 (quoting that "[t]he present system seems to offer: (1) The maximum protection for fraud; (2) The minimum protection and convenience for honest dealing, and (3) The best of opportunity for small States and Territories to fill their coffers with the proceeds of taxing outsiders, and the best chances for their petty public officials to get a good income without doing any work.")

8 As seen, scholarly opposition to regulatory competition began at the very beginning of the twentieth century. 53 Most harsh critics have been done in this period while scholars asserted that regulatory competition would lead to the "survival of the unfit". 54 Accordingly, liberalization in corporate law would produce the lowest common standards. 55 It was reported in this period that "[t]he annual meetings are held in the most inaccessible places, in far-off chartermongering states, Delaware, South Dakota, or West Virginia - even New Jersey is in some respects a long way from New York."56 States compete "to secure the most inefficient and unsocial form of legislation" and use "hiring experts to examine the laws of all the other states in order to determine which of these are most lax" and "most exploitative of the public" in "certain fields of law."57 States have been criticized for allowing corporations to engage in "questionable financing" in exchange for franchise taxes. State competition became "a competition to bestow charters which are less and less protective of the interests of the public and more suitable for the purposes of separation of control and responsibility". 58 In this environment, no state can insulate itself from this erosion as "[f]ew states are so free from fault in this respect that they can afford to cast the first stone. " 59

53 See Reuschlein, Federalization, supra note 33 at 91 (noting that "[i]rresponsible chartermongering" disturbed 1 sociologists, economists and lawyers). See for the harshest critique in the 19 1, century, Note, little Delaware Makes a Bidfor the Organization a/Trusts, 33 AM. L. REV. 418 (1899). 54 See Zillmer, Unfit, supra note 34, at 514 (noting that ""competition between the States produces a survival of the unfit, a truly anomalous situation."). 55 Scholars noted that "to the model set by these -the most lenient states- the other states are bound sooner or later to conform." (See Zillmer, Unfit, supra note 34, at 514.) Moreover, "corporate laws of the States tend to drag down one another to the level of the lowest" (See Zillmer, Unfit, supra note 34, at 514.) and "in industrial legislation the State laws are a survival of the unfit. Why? Because the States are industrially competitive." (See Zillmer, Unfit, supra note 34, at 521). 56 See WILLIAM z. RIPLEY, MAIN STREET AND WALL STREET, 155 (BOSTON: LITTLE BROWN & Co.: 1927). 57 See Zillmer, Unfit, supra note 34, at 509. 58 See E. A. Kinkaid, Book Reviews, 14 VA. L. REV. 240, 242 (1927-1928). 59 See James B. Dill, National Incorporation Laws for Trusts, 6 YALE L. J. 273, 282 (Apr., 1902).

9 The Berle-Means theory noted that sophisticated investors of the 1930s did not choose

Delaware-incorporated corporations because of "[t]he looseness of the Delaware law and the kind of charters which may be drawn under it. "60 At that time, while Delaware granted general waiver for preemption rights in the charter, German and French law fortified such rights by making them "absolute" and preventing a Delaware type "general waiver". 61 In 1947, it was commented that "[e ]ven speculators are reluctant to bid for an engraved certificate showing that someone made a capital contribution but received in return for it few or no enforceable rights. "62

A study made in 1942 found that 27 of the top 100 U.S. corporations are incorporated in

Delaware. Except for two of them, all these corporations had no inspection clauses although the

Delaware judiciary declared these clauses illegal as of 1940. 63 It was suggested that this situation could be caused by the ignorance in the top chambers oflaw practice and legal draftsmanship. 64

In 1958, commentators continued to note that state competition in the charter market rendered the corporate statutes all-enabling. 65 Liberal states corporate statutes consist of all-enabling clauses with loopholes to exploit investors while offering no investor protection. 66

60 "This is particularly true where the stock is "preferred," i.e., depends mainly on the contract for its value". See Adolph A. Berle, Jr. & Gardiner C. Means, Corporations and the Public Investor, 20 AM. ECON. REV. 54, 60 fn. l O (Mar., 1930) (citing Davis v. Louisville Gas & Electric Co., 16 Del. Ch. 157, 142 Atl. 654 (Ch. 1928)). Note, Alteration of Redemption Features of Preferred Stock by Charter Amendment, 46 YALE L. J. 1055, 1058 (1936- 1937) (noting that redemption feature of the contract would be "illusory" under the broad Delaware statute so investors would refrain from such security). 61 See Harold H. Neff, A Civil Law Answer to the Problem of Securities Regulation, 28 VA L. REV. 1025, I 049-50 fn. 68 (Jun., 1942) (citing DEL. REV. CODE (1935) c. 65 § 5( 10); GER. STOCK CORP. ACT (AKTIENGESETZ) (1937) § 153, Decree of August 8, 1935). 62 See George D. Hornstein, Rights ofStockholders in the New York Courts, 56 YALE L. J. 942, 957 (Jun., 1947). 63 See Hornstein, Rights, supra note 62, at 946 ( citing Samuel M. Koenigsberg, Provisions in Corporate Charters and By-laws Governing the Inspection of Books by Stockholders, 30 Geo. L. J. 227, 244 (1942); State ex rel. Cochran v. Penn-Beaver Oil Co., 4 Harr. 81, 143 At!. 247 (Del. 1926)). 64 See Hornstein, Rights, supra note 62, at 946. 65 See Jennings, States, supra note 1 at 193. 66 See Id. at 194.

10 The discussion ignited in 1969 again with the seminal articles of Harry M. First,67 and that of William L. Cary. 68 Floodgates of academic discussion· were opened with the publication

of these pieces. It should be noted that the views of the government-discipline school are not

caused by anti-Delaware sentiments. Scholars do not have a specific sentiment against Delaware.

Even one commentator suggested that Delaware be compensated for revenue loss after possible

federalization. 69

Firms will shift to more liberal regimes under the comparative advantage theory. 70 Path

dependence of low resistance will render the corporate codes more liberal. 71 Corrective measures

adopted by states running ahead of the charter market can easily be thwarted by other states

entering the market. 72 Therefore, corporate law's history in the U.S. becomes a history of

liberalization and abolition of restrictions on corporate management. 73 As a result, regulatory

67 See Harry M. First, law for Sale: A Study of the Delaware Corporation Law of 1967, 117 U. PA. L. REV. 861 (Apr., 1969). 68 See William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 YALE L.J. 663, 670 (1973- 1974). This article is the most cited article published in Yale Law Journal as of 1991 (See, Fred R. Shapiro, The Most-Cited Articles from the Yale Law Journal, 100 YALE L.J. 1449, 1462 (1991)). 69 See Donald E. Schwartz, Federalism and Corporate Governance, 45 OHIO ST. L.J. 545, 545 et seq. ( 1984). 70 See Daniel C. Esty & Damien Geradin, Regulatory Co-Opetition, 3 J. INT'L ECON. L. 235, 245 (2000). See for the development of the comparative advantage theory, ADAM SMITH, AN INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS, (London, 1776); ROBERT TORRENS, AN ESSAY ON THE EXTERNAL CORN TRADE (WITH AN APPENDIX ON THE MEANS OF IMPROVING THE CONDITION OF THE LABOURING CLASSES) (London, Longman, Rees, Orme, Brown, & Green; 1829); DAVID RICARDO, ON THE PRINCIPLES OF POLITICAL ECONOMY AND TAXATION (London, 1817). 71 See Bernard Black & Reinier Kraakman, A Self-Enforcing Model of Corporate Law, 109 HARV. L. REV. 1911, 1976-78 (Jun., 1996); State competition leads to a erosion of public policies also in the banking sector as FDIC (Federal Deposit Insurance Corporation) nationalizes risks (See Esty & Geradin, Co-Opetition, supra note 70, at 241 (citing Henry Butler & Jonathan R. Macey , The Myth of Competition in the Dual Banking System, 73 CORNELL L.REv. 677 (1988)). 72 See Ripley, Street, supra note 56, at 52 73 See Ernest L. Folk, III, Some Reflections qf a Corporation Law Draftsman, 42 CONN. BAR J. 409, 411-2 (1968); Donald E. Schwartz, Federal Chartering of Corporations: An Introduction, 61 GEO. L. J. 71, 75 (1972-1973) (agreeing with Folk); See Ralph K. Winter, Jr., Private Goals and Competition among State Legal Systems, 6 HARV. J. L. & Pus. POL'Y 127, 127 (1982-1983) (noting that "[t]he history of American corporation law has been, by everyone's agreement, a history of the reduction of legal restrictions on the power of management).

11 competition will erode public policies in corporate law because of these dynamics. 74 The government-discipline school determines that "State laws lack focus" and they do not provide adequate guidance to investors. 75

It has been suggested that the government discipline school has a "proregulation bias."76

However, the government-discipline school provides a product-oriented explanation like its market-oriented counterpart. Heterogeneous legal products are governmental interventions for reallocation of resources in order to protect parties who are deemed to be disadvantaged by free bargain. 77 The losers of heterogeneous legal products are to benefit in a regulatory competition for heterogeneous legal products. Then, regulatory competition for heterogeneous legal products produces convergence while eroding legal protection of the weaker side of the bargain. 78

Convergence on heterogeneous legal products will not happen if legislators are informed about the preferences of the citizens and respect them. 79 In other words, the government does not provide judicial or legislative preapplied remedies readily in a regulatory competition system.

Thus, users of a regulatory system will be forced to either contract or diversify against risks. As a result, each unit would develop its own contractual remedies. Judicial endorsement can validate the private policy. However, development of contractual remedies each time consumes more resources. Total social costs in a government-discipline system may be lower than the total costs

74 One of the most eloquent articulations of race to the bottom theory was perfected by Professor Ogus (See Anthony Ogus, Competition between National Legal Systems: A Contribution of Economic Analysis to Comparative Law, 48 INT'L L.Q. 405, 412 et seq. (Apr. 1999)). See also Bratton & McCahery, New, supra note 25at 217; Bayless Manning, Economic Policy and the Regulation of Corporate Securities 81 (H. Manne ed. 1969) (stating that "[c]orporate law's policy content is emptied."); Bayless Manning, The Stockholders' Appraisal Remedy: An Essay for Frank Coker, 72 YALE L. J. 223, 245 fn. 37 (1962). 75 See Schwartz, Federalism, supra note 69, at 555 (citing A.L.I. PROJECT, supra note 33, at§ 2.01). 76 See Macey & Miller, IGT, supra note 6, at 471. 77 See Ogus, Competition, supra note 74, at 412. 78See Id., at 413. 79 See Id., at 413-14.

12 in a market-discipline system. The government-discipline school invites federalization in different degrees to eliminate sub-optimal consequences of a regulatory erosion situation. 80 Sub- optimality fears were a motive for the federal or supranational regulation both in the U.S. and the

E.U.81

(2) Market-discipline School (Race to the Top)

The market discipline view is the mainstream view in academia. 82 The academic debate on regulatory competition began in the in the heyday of New Jersey as the national incorporation haven. The basic tenets of the market-discipline school had been set forth by Edward Keasbey before Charles M. Tiebout wrote his seminal work on provision of public services by local governments.83 According to Keasbey, New Jersey was determined to eliminate the burden on business.84 New Jersey's basic policy was to facilitate capital accumulation rather than limit such behavior as other states did at that time. 85 Subjecting the corporations to the dynamics of market is the best solution86 as corporations are a part of private affairs. 87 The New Jersey legislation

80 See Cary, Reflections, supra note 9, at 701 et seq.; Bratton & McCahery, New, supra note 25 at 217 (indicating that story race to the bottom story invites "preemptive centralization") 81 See Esty & Geradin, Co-Opetition, supra note 70, at 245. 82 See Klausner, Networks, supra note 16, at 842 (arguing that the market discipline school cannot adequately explain the reasons of the harmony in the state corporate laws, the reasons why Delaware is the dominant state in the charter market while other state laws are similar and whether the current trends will continue in the future). 83 See, Charles M. Tiebout, A Pure Theory of local Expenditures, 64 J. POL. ECON. 416 (Oct., 1956) (providing a "simple model" for competition between local governments). 84 See Keasbey, N.J. I, supra note X at 211. 85 See Id., at 209; Keasbey, N.J. (2), supra note X at 264. 86 See Keasbey, N.J. I, supra note X at 210 (indicating corporations should be subject to the "laws of the trade"). 87 See Id., at 211.

13 was based on a candid belief that society will be made better off with a more liberal approach. 88

Similar to the modern captive theory, it was also suggested that the policy of New Jersey was developed for domestic economic purposes and to foster its citizens' well-being rather than attract incorporations from other states. 89

The market-discipline school emphasizes the charter market competition's role to maximize franchise taxes in the production of corporate law. This line of thought considers that an appropriate incentive system like the invisible hand will solve the problems of efficient corporate law and investor protection. Corporate managers have the incentive to choose the most optimum corporate law rules in order to protect their tenures. 90 Therefore, managers choose the most optimal state corporate law jurisdiction for its seat of incorporation. 91 Thus, laws created by regulatory competition are presumptively optimal according to the market-discipline school.92

Efficient laws would arise even the legislators were not incompetent and did not have the a d equate mcent1ves. . mt . h e mar<.et.l 93

88 See Id., at 209-10. 89 See Id., at 212. 90 See Easterbrook, Investors' Welfare, supra note 11, at 564; Daniel R. Fischel, The "Race to the Bottom" Revisited: Reflections on Recent Developments in Delaware's Corporation Law, 76 NW. U. L. REV. 913, 919 (1982); Ralph K. Winter, Jr., State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. LEGAL STUD. 251, 256-8 (1977). 91 See FRANK H. EASTERBROOK & DANIEL R. FISCHEL, THE ECONOMIC STRUCTURE OF CORPORATE LAW 5-7 (2nd ed. 1996); Ralph K. Winter, Jr., The Race for the Top Revisited: A Comment on Eisenberg, 89 COLUM. L. REV. 1526, 1526 (1989); See RICHARD A. POSNER, ECONOMIC ANALYSIS OF LAW 458-59 (5th ed. 1998); Fischel, Recent Developments, supra note 90, at 915 (disagreeing Cary); See Romano, Product, supra note 22, at 280-81 (State competition results in optimum corporate law). See Dodd & Leftwich, supra note 5, at 260-61; Easterbrook, Investors' Welfare, supra note 11, at 549-50. 92 See Winter, Theory, supra note 90, at 256; Fischel, Recent Developments, supra note 90, at 919; Easterbrook, Investors' Welfare, supra note 11, at 549. 93 See Armen A. Alchian, Uncertainty, Evolution, and Economic Theory, 58 J. POL. ECON. 211, 213 (1950) (indicating that supply and demand dynamics in the market may be more efficient than personal incentives); O'Hara & Ribstein, Efficiency, supra note X at 1163 (agreeing with Alchian).

14 The market imposes certain limits on local governments, and therefore states may not engage in a ruinous charter competition that decreases the value of firms because significant drops in the firms' value either initiate take-overs or invite federalization. 94 The government- discipline school desires centralization, harmonization, and redistribution of wealth. In contrast, the market-discipline school opposes all of these factors and demands decentralization, arbitrage opportunities and minimal government intervention.95

(3) Criticism of the Market-discipline School

The market-discipline school extends the Tieboutian model to corporate law in order to respond to the claims of the government-discipline school.96 Corporations incorporated in

inefficient jurisdictions have to pay more for equity capital. 97 State laws allowing shareholder

exploitation causes drops in firms' value. As a result, rational firms do not migrate to states

where they will be acquisition targets because of diminished share value. 98 However,

development of the antitakeover statutes in the early 1980s rendered this incentive inapplicable.

Then, the market-oriented school made a revision to its theory. The market regulation theory is

inapplicable to the anti-takeover jurisdictions.99 Managerial entrenchment incentives neutralize

94 See Melvin Aron Eisenberg, The Structure of Corporation Law, 89 COLUM. L. REV. 1461, 1514 (Nov., 1989). 95 See Bratton & McCahery, New, supra note 25 at 220 Tb. 1; Daines, Choice, supra note 4, at 1563. 96 See Bratton & McCahery, New, supra note 25 at 210. 97 See Winter, Competition, supra note 73, at 127 et seq. 98 See Winter, Theory, supra note 90, at 266. 99 See Id., at 287-89; Weiss, Proposal, supra note 194, at 1721 (indicating that "the economic argument in favor of allowing states to establish most corporate governance rules, first developed by then-Professor Ralph Winter, does not apply to takeover-related rules.")

15 the optimum jurisdiction incentives and render managers indifferent to the costs of antitakeover jurisdictions.100 Nonetheless, critics added that state antitakeover statutes reflect that competition among governments can distort the market disciplining mechanisms. 101 Studies found that state antitakeover statutes are insignificant factors to reason for IPO stage incorporations; however,

IPO stage corporations choose Delaware because of poison pill or control share statutes. 102

That firms might not be able to afford to incorporate in exploitative jurisdictions because of additional capital raising costs suggestion is also not convincing. An increase in the capital accumulation costs because of relocation into a more liberal regime does not affect firms not seeking external capital. 103 Thus, market discipline is not applicable to corporations not relying upon equity markets for funding. 104 A study made in 1987 notes that most of the largest U.S. corporations did rely upon internal cash flow for funding rather than upon equity markets. 105

Furthermore, legal rules allowing exploitation might not prevent current funding. It affects only prospective financing, which is not relevant for the current managers. 106

The market-discipline school also suggests that relocation to a shareholder-exploitative regime possibly causes a one-time price drop in relevant securities. 107 However, this decrease and a related increase in capital accumulation costs are not substantial enough to deter

100 See Winter, Theory, supra note 90, at 287-89. 101 See Coffee, Corporate Federalism, supra note 215, at 770-72; Bebchuk, Desirable, supra note 10, at 1467; Macey & Miller, IGT, supra note 6, at 471, 483. 102 See Daines, Choice, supra note 4, at 1597 (Study on 6,671 IPOs between 1978 and 2000); This study did not find a race to the bottom in IPO firms regarding antitakeover statutes (Ibid.). 103 See Charny, Competition, supra note 44, at 438. 104 See Coffee, Comment, supra note 32, at 1498.

!OS See Id., at 1499 (citing MERRITT B. Fox, FINANCE AND INDUSTRIAL PERFORMANCE IN A DYNAMIC ECONOMY: THEORY, PRACTICE AND POLICY 337, 345-49 (1987)). 106 See Eisenberg, Structure, supra note 94, at 1500. 107 See Charny, Competition, supra note 44, at 438.

16 relocations to more liberal regimes. 108 It is asserted that an increase in capital accumulation costs might be recouped by selling more securities. 109 However, this time demand to securities might not match the supply because the PIE ratio will decrease. Reputational impact associated for migration into more liberal regimes is marginal. 110 Managerial earnings from shareholder exploitation will exceed the losses resulting from the decrease because of relocation to a liberal

JUns· , d'1ct10n. · 111

The market-discipline school relies on the market as deterrence. 112 Critics respond that the market alone is not sufficient. For instance, the securities market does not initiate a competition to disclose corporate perks. 113 The market discipline school believes that inefficient laws will be cleaned up in the regulatory competition process. The charter-market competition is an incentive to states to repeal value decreasing laws, as was seen after Delaware's Smith vs. Van

Gorkom decision. 114 The density dependent view (network-effects theory) asserts that regulation is not necessarily efficient in a regulatory competition system and that regulation can fall short of optimality because of network effects. 115

The market-oriented school lays the empirical burden of proof on the inefficiency of the corporate law competition to the critics. Critics respond that states have already reached the

108 See Id, at 438. 109 See Id., at 438. 110 See Id., at 438. 111 See Id, at 446. 112 See William W. Bratton & Joseph A. McCahery, Regulatory Competition, Regulatory Capture, and Corporate Self- Regulation, 73 N.C. L. Rev. 1861, 1880 (1995) (Naming the market discipline school as "the market deterrent school"). 113 See Victor Brudney, Corporate Governance, Agency Costs, and the Rhetoric of Contract, 85 Colum. L. Rev. 1403, 1423 (Nov., 1985). 114 See Klausner, Networks, supra note 16, at 778 fn 67. 115 See Id., at 849 (asserting that "[a] state may succeed in winning the race by providing corporate law that falls short of optimality.")

17 bottom. 116 Government-discipline analysis does not necessarily imply that an event study would disprove this thesis. This school of thought asserted that state competition leads to a "uniform low-grade regime" and therefore relocation among these jurisdictions would not have a price impact. 117

(4) The Role of Franchise Taxes

(a) Franchise Tax Maximization or Optimization

The government discipline school criticizes state incentives for profit maximization. 118

On the contrary, the market discipline school concludes that states' franchise tax maximization results in optimal corporate law rules improving shareholders' wealth. 119 However, franchise tax maximization is different from franchise tax optimization. Basic patterns of taxation were revealed by a fourteenth-century philosopher, Ibn Khaldun. 120 A government can impose only a certain amount of tax burden on the taxpayers. 121 Ideal government should catch the optimum

116 See Eisenberg, Structure, supra note 94, at 1508. 117 See Id., at 1509. 118 See Schwartz, Federalism, supra note 69, at 555 [citations omittedj (indicating that there is no other mandate for state corporate regulators other than profit maximization yet.). 119 See ROBERTA ROMANO, THE GENIUS OF AMERICAN CORPORATE LAW 55 fn. 9 (AEI Press, 1993). 120 See Arthur B. Laffer, The Laffer Curve: Past, Present, and Future, Heritage Foundation Backgrounder #1765 (1 June 2004) available at (Last visited Mar. 4, 2008) (crediting Ibn Khaldun with the discovery of the concept of the Laffer Curve). 121 According to Ibn Khaldftn "[t]he amount of the tax revenue, is a fixed one. It neither increases nor decreases. When it is increased by new customs duties, the amount to be collected as a result of the increase has fixed limits (and can not be increased again). And when the tax revenues must go to pay for recently increased allowances that had to be increased for everybody in view of new luxuries and great expenditure, the militia decreases in number 18 point of taxation. 122 Therefore, franchise tax maximization is certainly not an appropriate governance tool as a maximum franchise tax might impair the maximum shareholder wealth.

States should seek franchise tax optimization without impairing optimum shareholders' value.

It has been estimated that the 40% of the annual Delaware state budget originates from corporate law business. 123 Delaware earned M$491. l from corporate franchise taxes out of total regulatory competition revenues amounting to M$626 in fiscal 2006. 124 In 2005, Delaware franchise tax revenues from corporations decreased although the number of corporate incorporations increased at a record pace. 125 It should be noted that since the great migration from New Jersey, Delaware has not changed its taxation regime for stability purposes. 126

from what it had been before the increase in allowances." (See IBN KHALDON, THE MUQADDIMAH: AN INTRODUCTION TO HISTORY 134 (FRANZ ROSENTHAL TRANS.) (Princeton University Press, 1967) (1377)). 122 According to Ibn Khaldun "[t]he assessments increase beyond the limits of equity. The result is that the interest of the subjects in cultural enterprises disappears, since when they compare expenditures and taxes with their income and gain and see the little profit they make, they lose all hope. Therefore, many of them refrain from all cultural activity. The result is that the total tax revenue goes down, as individual assessments go down" (See Id., at 231). 123 See Maureen Milford, Delaware's Corporate Dominance Threatened: Federal Intervention Could Put at risk a Third of State's Budget - "Overnight We Would Go Broke.", The News Journal (Mar. 2, 2008) available at (Last visited Mar. 10, 2008) (noting that "Taxes and fees paid by these corporations, as well as money from abandoned property, represented $1.06 billion of the state's $3.3 billion general fund in fiscal 2007.") 124 See, DEL. DEPT. STAT., DIV. CORP., 2006 ANNUAL REPORT (2007) available at (Last visited Mar. 22, 2008), at 2. 125 See, Ibid. (loss from incorporations' revenue was set off by the increase from LLC franchise taxes). 126 See Michal Barzuza, Price Considerations in the Market for Corporate Law, 26 CARDOZO L. REV. 127, 127 et seq. (November, 2004).

19 (b) Captivity Theory (Bonding Theory)

Captivity theory (hostage theory/bonding theory) is a sub-branch of the market discipline school. It is derived from the theory of hostages of Oliver Williamson. 127 In McChesney's model, too, regulatory subjects pay tribute to the legislature in order to prevent rent extraction. 128 The captivity theory basically notes a symbiotic relationship between the state of Delaware and the corporations incorporated therein. 129 Delaware's dependence on the franchise taxes establishes a

"bonding mechanism" between the state and the corporations incorporated within it. 130 Delaware cannot afford to lose franchise tax revenues. 131 Management groups do not have to establish associations in order to lobby before a state because franchise fees and indirect income related to incorporation business already provide adequate incentives for the state. 132 Delaware does not possess the authority to impose any legal conditions on corporations because "the power to

127 See Romano, Product, supra note 22, at 236 fn. 13 (noting the original theory was "Oliver Williamson's theory of hostages (contractual precommittment enabling exchange)"); Oliver Williamson, Credible Commitments: Using Hostages to Support Exchange, 73 AM. ECON. REV. 251 (1983). Oliver Williamson's tenure at the Yale Law School in 1983-88 has inspired the hostage theory. See for the contributions of Professor Williamson at the Yale Law School, [Yale] Center for the Study of Corporate Law, The Business Law Tradition at Yale: The Modem Era, 1955 -, available at (last visited March 30, 2008). 128 See Omri Yadlin, Commentary on Sitkoff, 69 U Chi L Rev 1167, 1169 (2002) (citing McChesney, Money, supra note X, at 19). 129 See Romano, Genius, supra note 119, at 37, 43-44; (noting "reciprocal dependence" between the state of Delaware and the corporations); Romano, Product, supra note 22, at 273 et seq.; Roberta Romano, The State Competition Debate in Corporate Law, 8 CARDOZO L. REV. 709, 721 et seq. (1987); Ribstein, Constitution, supra note X at 117 (asserting that "states are encouraged to compete for incorporation business by offering strong promises that they will not excessively tamper with their statutes"). 130 See Coffee, Comment, supra note 32, at 1499 (noting that Professor Romano made an "accurate observation" in this regard.). 131 See Curtis Alva, Delaware and the Market for Corporate Charters: History and Agency, 15 DEL. J. CORP. L. 885, 908 (1990) (In 1990, approximately %20 of Delaware State's income was generated through corporate related fees and taxes); Romano, Product, supra note 22, at 273-79 and 290-81; Romano, Debate, supra note 129, at 721-22. 132 See Bratton, Delaware Law, supra note 21 Oat 455.

20 exclude is the power to exact conditions." 133 The Delaware legislature does not reach to corporate taxes to satisfy fiscal needs to maintain the stability of the incorporation taxation regime. 134

According to the hostage theory, Delaware becomes more captive the more corporations it has. The more captive Delaware becomes, the more Delaware wants to keep the corporations.

Therefore, it updates its law frequently. 135 This phenomenon has been named the "echo effect."136 Moreover, Delaware's dependence on franchise taxes creates a bonding mechanism to correct its law if Delaware does not fulfill "expectations of business planners". 137 Delaware may not make a mistake as it has too much to lose. 138 Delaware is the hostage of its success so

Delaware may not impair corporations radically. 139 The prospects of the revenues should be material to become hostage in regulatory competition. New Jersey gained strength as its domestic economy developed. New Jersey gained its independence from the chartering business as it lost its "hostage status."140 Therefore, a state's prospective physical investments should be low enough in order to maintain its hostage position. A state's interests in franchise tax revenues will diminish when real investments in the state increase.

133 See Comment, Boundaries, supra note 46, at 741. 134 See Arsht, Delaware, supra note X at 166. 135 See Romano, Product, supra note 22, at 277. 136 See Id., at 280. 137 See Daines, Choice, supra note 4, at 1582 fn. 83. 138 See Romano, Product, supra note 22, at 235. 139 See Id., supra note 22, at 235. 140 See Christopher Grandy, New Jersey Corporate Chartermongering, 1875-1929, 49 J. ECON. HIST. 677, 685 (1989) but cf. Romano, Genius, supra note 119, at 35 fn. 11 (noting "Delaware's displacement of New Jersey as a market leader.")

21 Corporations tolerate the increased tax burden imposed on them in Delaware and pay

Delaware a tribute to ensure its future cooperation. 141 Furthermore, destination jurisdictions will offer credible commitment not to engage in opportunistic behavior to assure firms considering relocation. 142 However, Delaware still has to appease who make the incorporation and relocation decision. 143

Another vers10n of the bonding theory posits that since E.U. corporations may not relocate, then the E.U. countries "need to ensure that local corporate law meets the expectations of the international investor community." 144 Until now, the European states updated its law because of their dependence on these firms for national welfare. E.U. member states should ensure that their law "does not fall behind." 145 This theory separates the fiscal incentives from captivity and asserts that a local government has an obligation to update its corporate law in order to maintain the competitiveness of the local economy.

It is not apparent in the captivity theory why the corporations do not use their leverage in order to decrease the franchise taxes. It has been suggested that the reason for the separation of ownership and control is the incremental stake of the shareholders in corporations. Shareholders' influence on the corporation is correlated with the number of shareholders. The more shareholders there are, the less influence shareholders have. 146 As such, corporations' influence on Delaware diminishes as the number of incorporations in Delaware increases. Moreover, hostage theory conflicts with the density dependent view. The more corporations incorporate in

141 See Romano, Product, supra note 22, at 236, 279, 280. 142 See Romano, Genius, supra note 119, at 36-37. 143 See Coffee, Comment, supra note 32, at 1499. 144 See Kamar, Incorporations, supra note 2, at 1729. 145 See Id., at 1731. 146 See Berle & Means, Public Investor, supra note 60, at 58.

22 Delaware, the more Delaware becomes captive to franchise taxes in the captivity theory's terms.

However, according to the density dependent view, the more corporations incorporate in

Delaware, the more valuable Delaware charter becomes as the number of precedents and infrastructure depends on the volume of incorporations. 147

Another application of Ibn Khaldun's theories is the state predation problem. State predation problems occur when incentives to produce in an economy diminish because government takings amount to most of the individual wealth and means. Risk taking and investments diminish as state predation increases. 148 Credible commitment of governments will solve state predation and soft budget constraint problems149 while empowering markets. 150 Thus, state predation problems might be solved by credible commitment of local governments. 151 For instance, People's Republic of China solved the problem of state predation by allowing bank account openings in fictitious names, so rendering attachment of these accounts impossible. 152

Likewise, KKR while investing in target corporations in acquisitions bonded itself and assured investors against opportunism reducing "monitoring costs". 153 Captivity theory suggests that the

147 See Klausner, Networks, supra note 16, at 844. 148 See DOUGLASS NORTH, INSTITUTIONS, INSTITUTIONAL CHANGES AND ECONOMIC PERFORMANCE (Cambridge; New York: Cambridge University Press, 1990); Qian & Weingast, Federalism, supra note 150, at 84 (agreeing with North). 149 "Soft budget constraint" problem arises when States rescue failing firms or contribute maintenance of inefficient firms subsequently causing risk taking and investments diminish. See for soft budget constraints, Janos Komai, Resource-Constrained Versus Demand Constrained Systems, 47 Econometrics 801 (1979); Janos Komai, The Soft Budget Constraint, 39 KYKLOS 3 (1986); Janos Komai; Eric Maskin & Gerard Roland, Understanding the Soft Budget Constraint, 41 J. Econ. Lit. 1095 (Dec., 2003). 150 See Yingyi Qian & Barry R. Weingast, Federalism as a Commitment to Preserving Market Incentives, 11 J. ECON. PERSP. 83, 84 (Autumn, 1997). 151 See Ibid 152 See Id., at 86. 153 See Allen Kaufman, Ernest J. Englander, Koh/berg Kravis Roberts & Co. and the Restructuring of American Capitalism, 67 Bus. HIST. 52, 68 (Spring, 1993).

23 dominant state in the charter market acquired this position by pledging to remain reactive to business interests. 154

Franchise taxes play an important role in hostage analysis. Hostage theory studies found a positive correlation between responsiveness [that is to transplant other states' laws] and state franchise tax revenues. 155 According to the hostage theory, the state of Delaware solves the state predation problem by making the franchise taxes meaningful in its budget. 156 Benefits of being hostage are reserved for only small states, according to the hostage theory. 157 Therefore, regulatory competition will not produce efficient laws if in a federal country where all local government units are partitioned roughly equal in size because of historical reasons.

According to the hostage theory, a lower level of franchise taxes is not capable of rendering a state as a hostage and competitive in the charter market. 158 Attracting incorporations rather than business operations do not add meaningful revenues for many states. 159 A study found that nineteen states did not have an annual subscription fee. 160 Parties will not choose non- franchise tax generating Delaware laws pursuant to the hostage theory even if the superior

154 See Romano, Genius, supra note 119, at 37, 128 (noting that "[f]or the corporate charter market to work then, the state must be able to offer a credible commitment against opportunistic breach of the relational chartering contract that it will maintain a responsive corporate law regime"). 155 See Romano, Product, supra note 22, at 239. "The diffusion of corporate law reforms informs the hypothesis of interest for testing that I glean from the story in the literature - Eisenberg's characterization of the essence of state competition, that states that obtain a higher proportion of their revenues from franchise tax collections will be the most responsive to corporate desires and competitive pressures" (See Romano, Product, supra note 22, at 235). 156 See Romano, Genius, supra note 119, at 43- 44 (noting "reciprocal dependence" between the state of Delaware and the corporations). 157 See Romano, Genius, supra note 119, at 128 ("competition is viable only for a subset of states, those small enough for franchise revenues to make a budgetary difference.") 158 See Romano, Product, supra note 22, at 278.

159 See Bayless Manning, Thinking Straight about Corporate Law Reform, 41 LAW & CONTEMP. PROBS. 3, 18 (Summer, 1977). 160 See Romano, Product, supra note 22, at 255.

24 Delaware forum is available. 161 Therefore, corporate law will be presumably inefficient, if there is no monopoly in the corporate charter market generating meaningful revenues. Revenues and profit spread necessarily erode in a competitive market. Therefore, the hostage theory links efficient corporate law to the monopoly power.

Delaware's strength is much more limited when compared with federal regulators.

Delaware collects around M$600 franchise tax revenues annualli 62 while the SEC collects $2

Billion. 163 Smaller regulators have limited capabilities and cannot take benefits of scale economies. 164 Thus, a local state may not carry a comprehensive structure. Indeed, "[p]ygmy states" do not have leverage over giant corporations. 165 Government discipline school accedes that the most important issue the Congress ignored while enacting SOX was self-funding for the

SEC. 166 The Federal Reserve System's independence and performance could be maintained by self-funding. 167 Furthermore, the stock exchange is a best hostage and regulator according to hostage theory's terms because stock exchanges are 100% fee-dependant; however, Delaware state has a diversified revenue base and incorporation-related fees reach to approximately 40% of

Delaware's state revenues. Delaware may promulgate a sales tax if there is a mass exodus out of

Delaware, but the NYSE can not impose a tax as it is not a sovereign entity.

161 See Larry E. Ribstein, Delaware, Lawyers, and Contractual Choice of law, 19 DEL. J. CORP. L. 999, 1012-3 (Summer, 1994). 162 See Kamar, Incorporations, supra note 2, at 1752. 163 See Joel Seligman, Self-Funding for the Securities and Exchange Commission, 28 NOVA L. REV. 233, 244 (2004). 164 See Esty & Geradin, Co-Opetition, supra note 70, at 243 (noting that "[t]he smaller the regulating entity, the more likely it is to suffer from a lack of scientific, technical, and analytic economies of scale."). 165 See Reuschlein, Federalization, supra note 33 at 112. 166 See Seligman, Self-Funding, supra note 163, at 233 (adding that the Congress might not easily relinquish its fiscal control). 167 See Seligman, Self-Funding, supra note 163, at 256.

25 The hostage theory expects that relocation movements out of Delaware will be low because of the high relocation costs. 168 However, the true solution to state predation is regulatory competition and mobility of firms 169 rather than monopoly and a dormant relocation market.

Migrating firms are mostly indifferent to additional state taxation costs according to the hostage theory. 17° Corporations do not have political leverage in states where the only connection is incorporation. Their only leverage is the threat to exit. The exit is costly and therefore not credible against the seat of incorporation. 171 Thus, Delaware's dominance in the charter market can be explained by the existence of entry barriers into the market rather than voluntary captivity. 172 Overall assessment shows that the captivity theory is important as it signifies a "rent incentive." 173

(5) Investor Ability to Assess the Value of Corporate Law

The issue whether corporate law rules affect the price of securities is controversial. The market oriented school asserts that if any state exploited the shareholders, then the securities of the firms incorporated thereof would be discounted. Similarly, based on the efficient market hypothesis, it is also argued that corporate law rules are incorporated into the price positively or

168 See Romano, Genius, supra note 119, at 34. See for information on corporate mobility, Kagan Kocaoglu, State Legislation and Corporate Mobility, (May 22, 2007) (Unpublished section of JSD Dissertation, Georgetown University) (On file with the Library of Congress). 169 See Qian & Weingast, Federalism, supra note 150, at 88. 170 See Romano, Product, supra note 22, at 255 (finding that relocations for tax purposes are insignificant). 171 See William J. Camey, The Political Economy of Competition for Corporate Charters, 26 J. LEGAL STUD. 303, 328 (Jan., 1997). 172 See William W. Bratton, Corporate Law's Race to Nowhere in Particular, 44 U. TORONTO L. J. 401, 412 (1994). 173 See Bratton & McCahery, Regulation, supra note 112 at 1888.

26 negatively at the IPO stage. 174 Investors afraid of exploitation will avoid the securities markets. 175 However, another view asserted that investors are not capable of assessing the exploitation capacity of state corporate law. 176 An intermediate view posits that investors will not change the price of the securities if advantages and disadvantages between two jurisdictions offset each other. 177

The value of the contractual term depends upon: (1) prospective judicial precedents, (2) business practices, (3) legal services received, and (4) "the effect the term has on the marketability of the firm's securities". 178 Corporations who would adopt a unique clause bear the costs associated with that provision's marketing. 179 The number of educated traders of a fungible security is more than that of the traders of a unique security. 180 "[I]f the firm adopts a unique or uncommon term, investors and analysts must adjust their pricing models, either formally or informally. " 181 However, it is hard to price even the most-significant contractual terms. 182 The hardest issues to contract out will cause decisions with the highest costs. 183

174 See Frank H. Easterbrook & Daniel R. Fischel, The Corporate Contract, 89 COLUM. L. REV. 1416, 1431 (1989) (arguing that "[t]he price reflects the effects, good or bad, of corporate law."). 175 See Cary, Reflections, supra note 9, at 671. 176 See Brudney, Contract, supra note 113, at 1411 et seq. 177 See Elliott J. Weiss & Lawrence J. White, Of Econometrics and Indeterminacy: A Study of Investors' Reactions to "Changes" in Corporate Law, 75 CAL. L. REV. 551, 560-1 (1987). 178 See Klausner, Networks, supra note 16, at 774. 179 See Id., at 822. 180 See Id., at 785 (citing Ronald J. Gilson & Reinier H. Kraakman, The Mechanisms of Market Efficiency, 70 VA. L. REV. 549, 615 (1984)). 181 See Id., at 785. 182 See Loewenstein, Polemic, supra note 198, at 538. 183 See Veasey & Guglielmo, Developments, supra note 208, at 1423.

27 A significant portion of the value of contractual prov1s10ns lies in the prospective jurisprudence, and that is correlated to a provision's scope of adoption. 184 One theory argues that

"[c]onsiderable evidence suggests that" any amendments to Delaware law are reflected in securities prices immediately. 185 However, it is well documented that investors did not react to the six drastic Delaware decisions concerning corporate law. 186

Market oriented school maintains that investors will avoid inferior corporate laws.

Investors will discount securities of a corporation incorporated in a state allowing investor expropriation by managers. 187 Moreover, investors will avoid the securities market totally in order to prevent exploitation allowed by corporate laws. 188 Minority shareholders are not impaired by Delaware regulation which they purchased consensually. 189 Purchase price is connected to Delaware regulation. 190 However, there is a strong argument against the investors pricing the law notion. 191 Investors are ill equipped to assess exploitative features of corporate law, 192 and the incorporation choice. 193 Most investors are ignorant about the governance rules

184 See Klausner, Networks, supra note 16, at 778-79. 185 See Hyman, Controversy, supra note 39, at 380. 186 See Weiss & White, Reactions, supra note 177, at 551 et seq.; but cf. Merritt B. Fox, The Role of the Market Model in Corporate Law Analysis: A Comment on Weiss and White, 76 CAL. L. REV. 1015, 1015 et seq. (Oct., 1998); but cf. Elliott J. Weiss & Lawrence J. White, A Response to Professor Fox, 76 CAL. L. REV. 1047, 1048 et seq. (Oct., 1988). 187 See Chamy, Competition, supra note 44, at 437; Robert Daines, Does Delaware law improve firm value? 62 J. FIN. ECON. 525, 526 (2001) (arguing that "[w]hen legal rules increase managerial slack and entrench incumbent managers, investors pay less.") 188 See Cary, Reflections, supra note 68, at 671. 189 See Hyman, Controversy, supra note 39, at 379. 190 See Hyman, Controversy, supra note 39, at 379-80. 191 See Eisenberg, Structure, supra note 94, at 1516; John C. Coffee Jr., The Mandatory/Enabling Balance in Corporate Law: An Essay on the Judicial Role, 89 CO LUM. L. REV. 1618, 1618 (1989); Bebchuk, Desirable, supra note 10, at 1480; Brudney, Contract, supra note 113, at 1403 et seq.; Robert C. Clark, Contractual Freedom in Corporate Law: Articles & Comments; Contracts, Elites, and Traditions in the Making of Corporate Law, 89 COLUM. L. REV. 1703, 1703 et seq. (Nov., 1989). 192 See Brudney, Contract, supra note 113, at 1411 et seq.

28 of a corporation. 194 Moreover, the IPO price is set in the bargaining between the issuer and the underwriter based on the prospective interest to the offering by the investors. 195 Moreover, the idea that investors discount inefficient corporate law is not applicable to corporations already made public. 196 Furthermore, this idea also brings a buyer beware notion. 197

(6) Academic Moderation

Delaware corporate law is under the influence of a multi-faceted regime. 198 Delaware does not lead pro-managerial legislation because of the mixed risks it faces (including federalization). 199 Both the government-discipline school and the market-discipline school are the two extreme points of view. During academic discourse, theories "oversimplified" the functioning of the charter market and did not take into account any other factors. 200 Middle-

193 See Macey & Miller, IGT, supra note 6, at 487. 194 See Eisenberg, Structure, supra note 94, at 1517 (citing John C. Coffee Jr., No Exit: Opting Out, the Contractual Theory of the Corporation and the Special Case of Remedies, 53 Brook. L. Rev. 919, 935 (1987-1988)); Weiss Elliott J. Weiss, A Proposal for a Federal Takeover Law, 9 Cardozo L. Rev. 1699, 1707 (1987-1988) (noting that investors do not take into account governance matters such as incorporation state, state of antitakeover laws, etc. to their detriment). 195 See Eisenberg, Structure, supra note 94, at 1517 ( citing Lynn Stout, The Unimportance of Being Efficient: An Economic Analysis ofStock Market Pricing and Securities Regulation, 87 MICH. L. REV. 613, 651-52 (1988)). 196 See/d., at 1516. 197 See Id., at 1516 ("The argument is that a shareholder who buys stock cannot fairly complain that the corporation has a suboptimal managerial rule, because even ifit does, the shareholder has gotten what he paid for.") 198 See Mark J. Loewenstein, Delaware as Demon: Twenty-Five Years After Professor Cary's Polemic, 71 U. COLO. L. REV. 497, 524 (2000). 199 See Eisenberg, Structure, supra note 199, at 1512-13 (noting that this risk includes also federalization risk); Bratton & McCahery, Regulation, supra note 112 at 1893 (noting Eisenberg's theory). 200 See Eisenberg, Structure, supra note 94, at 1512 (noting that this "oversimplification" does not take into account interest group theory).

29 ground theories offer more explanation than extreme points of view. 201 Thus, the debate on charter competition is ensuing on the middle ground. 202 Some middle-ground views assert that although regulatory competition on corporate charters produces desirable results, it also produces undesirable results on takeover regulation. 203 Others state that regulatory competition produces undesirable results in conflict of interest transactions.204 Consequently, it has become the dominant view that market forces constrain Delaware to only a limited extent. 205

HI. Dual threat model

. States not only face horizontal competition but also vertical competition. Vertical competition between federal and state government disciplines state governments.206 Under the

"dual threat model," 207 Delaware is between dual dimensioned currents. These threats are the possibility of mass migration out of Delaware and the risk of total federalization of corporate law. Delaware is a hostage of these adverse currents. Managers may restrain Delaware by franchise revenues and the federal government may restrain on behalf of shareholders and the

201 See Eisenberg, Structure, supra note 94, at 1510 ("neither Cary nor Winter captured the actual dynamics of the charter market and leads to a position that is intermediate between those of Cary and Winter, although closer to Cary's."); Bratton & McCahery, Regulation, supra note 112 at 1883 (noting that "[o]pen-ended" models offer better "diagnosis" of the problem rather than governmental or marketist extremes.) 202 See Romano, Debate, supra note 129, at 753; Bratton, Nowhere, supra note 172, at 403 (agreeing with Romano that the debate resumes on the middle ground). Middle ground scholars' view is closer to government discipline school than to market discipline school (See Bratton, Nowhere, supra note 172, at 403). 203 See Bratton, Nowhere, supra note 172, at 401. 204 See Bebchuk, Desirable, supra note 204, at 1441 et seq. 205 See Loewenstein, Polemic, supra note 198, at 524. 206 See Esty & Geradin, Co-Opetition, supra note 70, at 238. 207 See Bratton, Nowhere, supra note 172, at 418-25.

30 interests of the national economy.208 Captivity theory does not consider the impact of federal intervention risk on Delaware.209 The dual-threat model fills this gap. The dual-threat model anticipates that a state will take a moderate regulation method in order to avoid a federalization risk.210

(1) Federalization Risk

The ability of the federal government to intervene distinguishes the American regulatory markets from the international regulatory markets. 211 The federal government's ability of federalization brings stability.212 A national government should intervene in a working regulatory competition market because of the unstable equilibrium.213

The emergence of a federalization risk can be explained by multiple factors. 214 It is suggested that Professor Cary's seminal article sparkled the federalization movement of the

208 See Bratton, Nowhere, supra note 172, at 419 (noting that "[t]he federal threat undeniably exists."); Eisenberg, Structure, supra note 94, at 1512; E. Norman Veasey & Christine T. Di Guglielmo, What Happened in Delaware Corporate Law and Governance From 1992-2004? A Retrospective on Some Key Developments, 153 U. PA. L. REV. 1399, 1504 (May, 2005) (noting that federalization risk shape Delaware law); Sean J. Griffith, Good Faith Business Judgment: A Theory of Rhetoric in Corporate Law Jurisprudence, 55 DUKE L.J. 1, 1, 54 (October, 2005) (noting that Delaware faces "twin-threat" (from other states and from the federal government) in the corporate charter market); Charny, Competition, supra note 44, at 446 (noting that the centralization/federalization risk is an institutional limit on local laws). 209 See Bratton, Nowhere, supra note 172, at 425. 210 See William W. Bratton, Delaware Law as Applied Public Choice Theory: Bill Cary and the Basic Course after Twenty-Five Years, 34 GA. L. REV. 447, 460 (1999-2000) (noting that "Delaware's mediative output" is to avoid federalization.). 211 See Joel P. Trachtman, Regulatory Competition and Regulatory Jurisdiction, 3 J. INT'L ECON. L. 331, 340 (2000). 212 See Ibid. 213 See Bratton & McCahery, New, supra note 25at 264. 214 See Bratton, Nowhere, supra note 172, at 422.

31 1970s.215 Therefore, the Delaware Supreme Court changed its direction because of the pressure from academia. 216 Moreover, rivals to the interest groups may capture federal level and assert their control from the senior federal level to the junior state levels. 217 For instance, non-Delaware lawyers might prompt for federalization. Bankruptcy lawyers lobby for preemption in order to eliminate Delaware's prominence in large-scale reorganizations.218Federalization of corporate law becomes more likely to occur after an exodus to a more pro-management jurisdiction than

Delaware. 219

All Delaware interest groups are aware of a possible federalization,220 and Delaware has to take into account federalization because of its stakes. 221 States cannot risk causing declines in the value of firms with their actions in the charter market. Significant drops in the firms' value either initiate takeovers or invite federalization. 222 However, there is a spectrum within which states may act free from a federalization risk. 223

Several scenarios are suggested to explain how Delaware acts upon the federalization risk. Delaware, faced with the federalization risk, employs "rhetorical devices" in order to thwart

215 See John C. Coffee, Jr., The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards, 8 CARDOZO L. REV. 759, 764-66 (1987); Eisenberg, Structure, supra note 199, at 1511-13; Bratton, Nowhere, supra note 172, at 419-20 (adding that the federalization risk was actual in the 1970s). 216 See Bratton, Delaware Law, supra note 210 at 463-64. 217 See Bratton & McCahery, Regulation, supra note 112 at 1900 (citing Terry M. Moe, Politics and the Theory of Organization, 7 J.L. ECON. & ORGS. 106, 124 (Special Issue, 1991)) 218 See Loewenstein, Polemic, supra note 198, at 506. 219 See Bratton, Nowhere, supra note 172, at 423. 220 See Curtis Alva, Delaware and the Market for Corporate Charters: History and Agency, 15 DEL. J. CORP. L. 885, 906-8 (1990); Bratton, Delaware Law, supra note 210 at 456-58. 221 See Bratton, Nowhere, supra note 172, at 425. 222 See Eisenberg, Structure, supra note 94, at 1514. 223 See Bebchuk, Desirable, supra note 10, at 1435.

32 the federalization threat by increasing managerial accountability.224 Recent emergence of good faith doctrine in the Delaware jurisprudence is a result of this phenomenon.225 Another scenario is that Delaware does not reduce its tariffs because increased market share would initiate federalization. 226 If Delaware's market share increases, then the risk of federalization increases.227 Delaware judiciary is the primary asset and litigation friendly rules are corollary products.228

Delaware adopted Unocal and Revlon doctrines because of an imminent federalization threat in the 1980s.229 The federalization risk produces a supplemental incentive for investor protection.230 However, it does not solve agency problems in entirety. 231 It is suggested that the

Delaware judiciary would be more deferential to managers in the absence of a federalization threat. 232 Another view asserts that corporate managers prefer to maintain Delaware incorporation because Delaware's meditative role prevents federalization. 233

The impact of federalization depends on its scope. Federal intervention on a particular issue restrains all of the states by closing competition not only to Delaware but also to its

224 See Griffith, Good Faith, supra note 208, at 1, 54. 225 See/d,at 1, 73. 226 See Bratton & McCahery, Regulation, supra note 112 at 1898. 227 See Ibid. (Traditional federalism defense will not justify Delaware's monopoly position). 228 See Bratton & McCahery, Regulation, supra note 112 at 1899. 229 See Griffith, Good Faith, supra note 208, at 67. 230 See Cary, Reflections, supra note 9, at 688; Eisenberg, Structure, supra note 199, at 1512-513; Bebchuk, Limits on State Competition, supra note X, at 1455; Bratton, Delaware Law, supra note 21 Oat 458; Bratton & McCahery, Regulation, supra note 112 at 1900 (noting that federalization risk pushes Delaware to more shareholder front). 231 See Bratton & McCahery, Regulation, supra note 112 at 1900. 232 See Griffith, Good Faith, supra note 208, at 69. 233 See Bratton, Delaware Law, supra note 210 at 471.

33 rivals. 234 Federalization of litigation-intense issues would deny Delaware premium.

Federalization of fiduciary duties would render the corporate law substantially "fungible" and would initiate price competition.235

Virtual federalism theory ("federal gravitational pull" theory) posits that federal minimum standards emerge even in the absence of actual federal intervention. The federal gravitational pull influences the state corporate laws without an actual intervention. States behave and protect investor rights in order to prevent further federalization. 236 However, continuous federal interventions to the state corporate law regime question the existence of such pull and require the dismissal of this theory. The mere risk of federalization is not sufficient for efficient investor protection. Federalization risk is always present in non-federalized issues. The federalization risk is no different from the risk for underperforming managers facing takeovers in the management literature or monopolies expecting an antitrust attack from the government.

Virtual federalism is centralized on the political clout of the federal government in corporate law matters. However, it has been observed that states have more soft power on corporate law matters than the federal government.

The federal government's role might not be a bundle of reforms promulgated at one time. 237 There has already been too much "federal encroachment on the internal affairs" of the corporation.238 However, the state of Delaware is indifferent to federal corporate law as it will

234 See Bratton, Nowhere, supra note 172, at 421-22. 235 See Id., at 422 n. 98. 236 See Roe, Delaware's Competition, supra note X, at 588 et seq. 237 See Schwartz, Federalism, supra note 69, at 588. 238 See Veasey & Guglielmo, Developments, supra note 208, at 1508.

34 continue to reap the benefits of incorporation.239 Market oriented school notes that past federalization politics are aimed at investor protection.240 Nevertheless, the market oriented school also indicates that this situation will not necessarily continue. Possible federal legislation is likely to take an opposite pro-management course because of the lack of citizen interest in corporate law legislation.241 Managers are better organized than dispersed shareholders.242

Federal legislation is not likely to produce a freer market for corporate control than state law. 243

However, the promulgation of the Sarbanes-Oxley Act weakened the pro-managerial federal corporate law expectation of the market oriented school.

The feasibility of federalization reinforces the magnitude of incentives for investor protection. 244 Magnitude of federalization risk is correlated to the intensity of federal corporate reform. The greater the federal reform will be, the less likely reform will be. 245 The role of federal threat is hard to quantify and easy to overemphasize.246 Therefore, federalization theories are not compellingly convincing.

The debate on federalization has been ongoing for more than a century. President

Theodore Roosevelt supported federal corporate law in 1904.247 It was proposed that the

239 See Roe, Delaware's Politics, supra note X, at 2518. 240 See Romano, Genius, supra note 119, at 67. 241 See Id., at 50. 242 See Id., at 75-76. 243 See Id., supra note 119, at 82. 244 See Bratton & McCahery, Regulation, supra note 112 at 1900 (noting that "[i]nstitutionalization implies the congressional mandate of a prospective and graduated scheme that ripens into preemptive mandates only to the extent that some background normative standard remains unsatisfied.") 245 See Bratton, Nowhere, supra note 172, at 422. 246 See Bratton, Nowhere, supra note 172, at 421. 247 Special to N.Y. Times, Federal Franchises is President's Plan - Administration's Trust Views Outlined by Garfield - State System Denounced - Says Operation of Corporation Laws Amounts to Anarchy - Commissioner Scores Abuses, N.Y. TIMES, December 22, 1904.

35 Congress federalize all subject matters subject to state competition in 1913.248 In 1951,

Government oriented school hoped that state legislatures "cleared the air" and would halt federal regulation of corporations and unincorporated entities.249 Two decades later, scholars led by

Professor Cary continued to indicate that increased market share of certain liberal state corporate laws would bring additional pressure of federalization. 25° Federal corporate law was not promulgated even after the great depression and the fall of Enron and its progeny. Several federalization efforts in the 1930s and the early 1980s were not fruitful and lost their momentum. 251

(2) Rival States' Impact

Delaware has information superiority over other states on the conditions of the charter market. Delaware can observe the incorporation rate better than any other state. Delaware can take action to attract incorporations if the incorporation rate is decreasing or to prevent the outbound migrations if the incorporation base is eroding. As a result, Delaware can observe the course of the charter market more efficiently than others. Delaware underwent a study for major amendment of Delaware corporate statutes after corporate filings dropped around 20% and thirty

252 states enacted comprehensive corporate law reforms in the early l 960s. The incorporation rate

248 See Zillmer, Unfit, supra note 34, at 524.

249 See Kenneth K. Luce, Trends in Modern Corporation Legislation, 50 MICH. L. REV. 1291, 1322 (1951-1952). 250 See Cary, Attack, supra note X, at 324. 251 See for the federalization efforts as of 1934, FEDERAL TRADE COMMISSION, COMPILATION OF PROPOSALS AND VIEWS FOR AND AGAINST INCORPORATION AND LICENSING OF CORPORATIONS, s. Doc. No. 92, 70th Cong., 1st Sess., pt. 69-A (1934). 252 See Seligman, History, supra note X, at 279-80.

36 increased from approximately 300 to 800 per month after the 1967 codification-liberalization in

Delaware.253 As a result, Delaware has the ability to anticipate and thwart any rival state entry into the charter market because of its information superiority. Accordingly, the current state of the charter market is a monopoly market.254 Therefore, horizontal pressure from rival states is not enough because of the costs of relocation.

(3) Interest Group Theory

Interest group theory is very similar to the regulatory capture theory. The latter theory notes that "the problem of regulation is the problem of discovering when and why an industry (or other group of like-minded people) is able to use the state for its purposes, or is singled out by the state to be used for alien purposes"255 The interest group theory is similar to rival theories in the suggestion that the law tilts to the benefit of the makers of incorporation and relocation decisions. However, the interest group theory correctly detects that incorporation decisions are influenced and carried out by the lawyers pursuant to their self-interest unlike other lines of thought. 256 Not only lawyers but also investment bankers contribute to the relocation choices in connection with underwritings. 257 The Delaware Supreme Court's procedural fairness opinions requiring fairness opinions from investment bankers create an incentive for investment bankers'

253 See Id., at 282. 254 See Kahan & Kamar, Myth, supra note 17, at 679 et seq. 255 See Stigler, Regulation, supra note X, at 3. 256 See Romano, Product, supra note 22, at 275 fn. 72; Macey & Miller, !GT, supra note 6, at 487 (agreeing with Romano); Daines, Choice, supra note 4, at 1563. Studies found that correlation between the site of corporate headquarters and incorporation state that indicating a lawyer influence in the incorporation decision (See Daines, Choice, supra note 4, at 1563). 257 See Romano, Product, supra note 22, at 273; Macey & Miller, IGT, supra note 6, at 473 (agreeing with Romano).

37 support for Delaware incorporation.258 Investors cannot second-guess incorporation advice of lawyers because of the high costs.259 Neither the government nor market oriented schools have relevance with the state competition when the incorporation choices are influenced by the legal profession rather than a management-shareholder conflict. 260

Interests of the states and local lawyers diverge. It is in the best interests of the states to increase the number of incorporations. However, independent of the number of incorporations, the lawyers' interest is to maximize the number of transactions and litigations.261 Naturally, managers are less concerned about the substance of the corporate law than the local bar.

l Managers' interest in the corporate law increases if the risk of loss they are exposed to increases.262 It has been suggested that states are more responsive to demands of managers than of lawyers' ,263 Some studies support this idea by documenting that lawyer-sponsored

amendments such as director indemnification were adopted in an average of fourteen years. In

contrast, management initiated antitakeover statutes adopted in an average of eight years. 264

However, these states lack powerful lawyer lobbies. Therefore, the relevant study is not decisive.

258 See Macey & Miller, IGT, supra note 6, at 488. 259 See Id., at 487. 260 See Daines, Choice, supra note 4, at 1601-02. 261 See Loewenstein, Polemic, supra note 198, at 504-05 (indicating that lawyers' interest is to appease the customers of the legal products). 262 See Camey, Competition, supra note 23, at 615. 263 See Id., at 615, 621, 624. 263 See Id., at 616. 264 See Id., supra note 23, at 616.

38 Corporation law has direct costs in the form of state franchise taxes and indirect costs in the form of legal fees to the corporation. 265 The Delaware economy benefits from both the franchise taxes and the legal fees generated. 266

Interests groups within one jurisdiction are not necessarily rivals and do not necessarily compete with each other. 267 The relevancy of the interest groups is more important than the mere existence of the interest groups. 268 Distinct groups with incompatible interests exist in

Delaware.269 Moreover, lawyers can occupy different roles in the ranks of the legal profession and therefore they have conflicting incentives to produce efficient law and extract rent at the same time. 270 In this picture, the Delaware bar tries to capture most of the corporate law related revenue to itself.271 The Delaware bar's efforts are borne unto itself. They are not prone to free- riding problems, unlike other interest groups. 272 Delaware lawyers are able to maximize their benefits by influencing the course of Delaware amendments.273 The Delaware bar's monopoly over the lawsuits in Delaware generates much more revenue than franchise taxes.274 Therefore, the Delaware bar prefers lowering of franchise taxes in order to attract more corporations.275 At

265 See Romano, Product, supra note 22, at 228 n. 3 (noting that state bar revenues should also be considered in the debate over maximization); Macey & Miller, IGT, supra note 6, at 492-93. 266 See Id., at 473. 267 See Yadlin, Commentary, supra note 128, at 1171. 268 See Id., at 1172 (noting that the interests of Nevada gambling industry and the incorporation industry interest are not identical). 269 See Macey & Miller, IGT, supra note 6, at 522-23; Yadlin, Commentary, supra note 128, at 1171. 270 See Ribstein, Delaware, supra note 161 at 1001. 271 See Macey & Miller, IGT, supra note 6, at 503-07. 272 See Id., at 522-23. 273 See Id., at 473. 274 See Romano, Product, supra note 22, at 241. 275 See Macey & Miller, IGT, supra note 6, at 503-04.

39 the same time, the Delaware bar tends to favor legal fee-generating rules even if such rules

diminish the incorporation base of Delaware at the expense of other interest groups. 276

The Delaware bar's interests are aligned with those of the out-of-state legal interest

groups. There is a tacit alliance between the Delaware bar and the out-of-state legal groups.

Litigation work benefits both Delaware lawyers and the out-of-state lawyers in the form of

transactional consulting work.277 Out-of-state interest groups object to federalization of the

corporate law because of this division.

The government discipline school heavily criticized the intertwined relationships between

the Delaware judiciary, the Delaware bar, the Delaware legislature and the Delaware Bar

Association's Corporate Law Committee, which carries out drafting of corporate law reforms. 278

In theory, interest group costs towards pertinent judiciary will decline and activity will lessen if the judiciary is already tilted toward the interests of that particular group. 279 Critics relying on the

interest group theory contend that Delaware judges are "partially" relieved against the interest

group pressures because of the guarantees bestowed upon judicial tenures in Delaware. 280

Indeed, Delaware judges' tenure has been guaranteed by removal with cause only by a special tribunal and by a twelve-year length of term that is similar to that of a semi-career judge.281

However, these guarantees do not eliminate the pressures Delaware state and the Delaware bar are facing. Judicial guarantees do not guarantee the amount of judicial work. Judges still risk

276 See Id., at 504. 277 See Ibid. 278 See Cary, Reflections, supra note 68, at 692, 704-05; Macey & Miller, IGT, supra note 6, at 502 (agreeing that the Delaware "The bar and the judiciary are tied together through an intricate web of personal and professional contacts.") 279 See Macey & Miller, IGT, supra note 6, at 502. 280 See Id., at 500. 281 See Ibid.

40 losing judicial business if Delaware loses its lure because of events such as mass outbound migration by corporations or total federalization of corporate law. Moreover, Delaware judges

face competition from the federal judiciary.282 These possibilitiess do not necessarily render the

Delaware judiciary evil. The Delaware judiciary may defer to the sophistication of the Delaware

legislation and the competence of the Delaware bar in good faith. 283

The iron triangle theory expects that personnel movements among private companies, the

executive branch and federal agencies, lead to the harmonization of mentalities among

companies and government.284 The government discipline school documented the transition

among the Delaware legislature, judiciary and private practice. 285 It was suggested to impose

additional constraints such as a two-year freeze period on personnel transfers from the public to

the private sector to prevent the consequences ofrevolving doors in the defense industry. 286 Such

a policy in the judicial bench of Delaware will cause the great expertise accumulated in the

Delaware justices to be wasted.

(4) Density-dependent View (Network-effects Theory)

282 See for a discussion of the federal implied rights of action Roger J. Dennis & Patrick J. Ryan, State Corporate and Federal Securities Law: Dual. Regulation in a Federal System, 22 PUBLIUS: J. FED. 21, 26 et seq. (Winter, 1992) (discussing Santa Fe Industries, Inc. v. Green, 430 U.S. 462 (1977)). 283 See Macey & Miller, IGT, supra note 6, at 502. 284 See Adams, Iron Triangle, supra note X at 209 (studying defense industry). 285 See Cary, Reflections, supra note 68, at 690-92 (tracing career movements of Delaware judges in 1951-1973 period). 286 See Adams, Iron Triangle, supra note X at 212.

41 Both the market oriented school and the government discipline school are density- independent views. Density dependent proposes that the theories on state competition on corporate laws be reviewed when network effects exist.287 Market oriented school wrongly assumes that the value of the contractual terms are irrelevant to the number of users of that term according to the density dependent view. 288 Modern corporation codes have become very similar because of diffusion of law caused by transplantations throughout their history. 289 Delaware corporate law has significance because of the amount of corporations incorporated there, not because of the substance of its code. 290 Network effects occur when the utility of a product becomes greater with increases in the number of users of the relevant product and its substitutes.291 A contractual term's value will be equivalent to its inherent value if only one corporation has adopted it. 292 Contractual provisions' value depends upon the number of firms using such provisions. Thus, its value increases if it is widely adopted or expected to be adopted.293 The more judicial enforcement and available legal services concerning that provision there are, the lesser costs of adopting that term. A contractual provision may become a business

287 See Klausner, Networks, supra note 16, at 767, 772. Density dependent view asserts that the market oriented school overlook the existence of network externalities (See Klausner, Networks, supra note 16, at 771). See for a criticism of the Professor Klausner's networks effects theory Mark A. Lemley & David McGowan, Legal Implications ofNetwork Economic Effects, 86 CAL. L. REV. 479, 564-84 (May, 1998). 288 See Klausner, Networks, supra note 16, at 761; Lemley & McGowan, Network, supra note 287, at 564 (agreeing with Klausner). 289 See Luce, Trends, supra note 249, at 1321. 290 See Ibid. 291 See Michael L. Katz & Carl Shapiro, Network Externalities, Competition, and Compatibility, 75 AM. ECON. REV. 424, 424 et seq. (1985); Klausner, Networks, supra note 16, at 763; Lemley & McGowan, Network, supra note 287, at 483 (agreeing and quoting Katz & Shapiro). 292 See Klausner, Networks, supra note 16, at 795. 293 See Id., at 761-62, 774-75.

42 practice or a form of security as a consequence of increased legal endorsement and decreased costs.294

Actual networks are formed when the utility of the product is to contact other users. On the other hand, virtual networks are established with products whose utility is pegged to the number of users.295 Likewise, contractual networks present a "virtual network" according to the density dependent view. 296 Widespread adoption of a contractual provision increases the rate of litigation associated with that provision. "In other words, the expected quantity and frequency of judicial interpretations is positively related to the number of firms that adopt the term."297

Corporate law provisions will be similar to technical standards when network effects are exhibited.298 Indeed, Delaware corporate law is a bundle of standard terms. 299

Network externalities cause suboptimality. An inferior product may occupy most of the market if network externalities persist.30° Competition in the charter market will not produce optimum corporate law if network externalities are present. 301 Network effects, if present, allow suboptimal legal regimes to become entrenched. 302 A firm will not move to more-efficient regimes if network effects are present. A study has found that retention rate of jurisdictions is

294 See Id., supra note 16, at 7 61. 295 See Lemley & McGowan, Network, supra note 287, at 488-94. 296 See Klausner, Networks, supra note 16, at 761-62, 775 ((borrows "virtual network" concept from Michael L. Katz & Carl Shapiro, Systems Competition and Network Effects, 8 J. ECON. PERSP. 93, 95 (1994)). 297 See Id, at 776. 298 See Id, at 841, 851. 299 See Marcel Kahan & Michael Klausner, Path Dependence in Corporate Contracting: Increasing Returns, Herd Behavior and Cognitive Biases, 74 WASH. U. L.Q. 347, 348 (1996). 300 See Klausner, Networks, supra note 16, at 764. 301 See Id, at 765. 302 See Larry E. Ribstein & Bruce H. Kobayashi, An Economic Analysis of Uniform State laws, 25 J. LEGAL STUD. 131, 184 (1996).

43 related with the incorporation base and increases with the volume of firms domiciled in the

JUns· · d"1ct10n. · 303

Density dependent school views that network effects have created a suboptimality and uniformity in American corporate law. 304 However, the density dependent view does not have implications other than the choice of law. Statutory reinforcement of choice of law provisions eliminates network advantages of dominant states.305 Moreover, the density dependent view falls

short on a couple of matters. First, density dependent view does not explain the initial establishment of the corporate law network. Similar to the captive state theory, it accepts that the dominant network has been established by the first-mover advantage.306 The great mass migration of corporations from New Jersey to Delaware must also have affected the network externalities. If this is true, then network externalities are portable. Should corporate law be federalized, then federal corporate law will create the same network benefits and impediments of

Delaware. Furthermore, the density dependent view expects that Delaware will continue enticing new firms in order to maintain the volume of incorporations affected by economic failures of firms. 307 However, network externalities attract incorporations to a jurisdiction like a magnet if present. Therefore, network effects breed monopolist laziness on the part of the local govemment.308 Density dependent theory's expectation that contractual terms' costs decrease as their usage increases is not substantiated by the ambiguity and fluctuation in Delaware. In addition, density dependent view presents a vicious circle. The volume of Delaware

303 See Daines, Choice, supra note 4, at 1596. 304 See Klausner, Networks, supra note 16, at 852. 305 See Id, at 845 Fn. 267. 306 See Klausner, Networks, supra note 16, at 847 fn. 275. 307 See Gordon, Corporations, supra note X, at 1962. 308 Professor Klausner implicitly accept such laziness on the part of Delaware (See Klausner, Networks, supra note 16, at 850 Fn. 283).

44 jurisprudence depends upon the market share in the incorporation market, 309 and the market share depends on the volume of law cases. It is not apparent the how this vicious circle can be broken.

(5) Corporate Lock-in in Delaware

Several factors such as the historical first mover advantage, substantial investment in

Delaware law caused by extended relationship, high outbound migration costs as a result of substantial investment, indeterminate law, state-specific training and barriers on free exit cause lock-in effect in the charter market.

(1) First-mover Advantage

Delaware has a derivative first mover advantage in the charter market. New Jersey had the first mover advantage in the charter market. Delaware acquired New Jersey's first mover advantage during the great corporate migration out of New Jersey. Adoption of the Seven Sister

Laws310 forced corporations to adapt to a new legal regime. Corporations had to conform to the new instate regime that requires drastic changes or to flee elsewhere. Corporation decisions to stay in New Jersey cost as much as a relocation, whereas migration into Delaware did not bring

309 See Romano, Product, supra note 22, at 273-78; Gordon, Corporations, supra note X, at 1962. 310 See, New Jersey Session Laws, Feb. 19, 1913, chaps. 13-19, pp. 25-33; Grandy, Chartermongering, supra note 140 at 689; Joseph F. Mahoney, Backsliding Convert: Woodrow Wilson and the "Seven Sisters", 18 AM. Q. 71 (Spring, 1966).

45 changes in the jurisdictional choice, or constitution of the governance of the firm. Costs of relocation into Delaware were offset by Delaware's tariffs, which were then less expensive than

New Jersey's. It was nearly impossible for New Jersey to convince its customers to shift to its new paradigm by thrashing their investment in New Jersey's prior law.

First mover advantages may cause some technologies to become standard and others obsolete.311 Historical path dependence determines the outcome of the competing technologies.312 Dominant technology is not necessarily superior to obsolete ones in this sense. 313

Pursuant to the captivity theory, the self-maintaining dominance in the charter market is a result of first mover advantage according to the theory. 314 Thus, the dominant jurisdiction's supremacy is a result of its precedence of entry. Accordingly, this theory deters new entrants into the charter market. In conclusion, captivity theory indicates that the acquisition of the dominant position in the charter market is by first mover advantage. Therefore, it implies that Delaware law is not efficient.

(2) Proprietary Lock-in

The disability to shift to rival hardware and software technologies because of prior investments leads to proprietary lock-ins in various industries.315 The lock-in effect varies in

311 See Arthur, Lock-in, supra note X, at 116, 123. 312 See Id., at 116. 313 See Id., supra note X, at 126. 314 See Romano, Product, supra note 22, at 280. 315 See Marshall, Reynolds & McCrory, Server, supra note X, at 17. See for a judicial discussion of the aftermarket lock-in effects from the perspective of antitrust law, Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451 (1992).

46 strength in different markets.316 The absence of mobility benefits only the single provider.317

Certain factors cause a lock-in effect for corporations incorporated in or relocated to Delaware.

In proprietary lock-in models, affordable durable products are sold while the vendor

profits from the sale of supplies in the aftermarket. Likewise, Delaware charges affordable franchise taxes while anticipating generating more revenue for its administration and residents

from corporate law- related services. In general, the internal affairs doctrine brings a mandate to use services originated from a single source: the incorporation state. Delaware's business model

anticipates that corporations constantly use its legal services. This use generates revenues and excess jurisprudence. Lack of such a business model creates a jurisprudential gap between rival

states and the dominant state. Non-judicial dispute resolution venues are not capable of producing jurisprudence on contractual terms. 318 Extended relationships cause entrenchment of the sole provider.319 The magnitude of sunk costs committed in the initial investment causes a

lock-in effect both in network or non-network sectors. 320 Migrating out of Delaware will cause a perceived loss of the highly praised Delaware judiciary, the abundant jurisprudence. Moreover, migrating from a liberal regime to a stricter regime brings compliance costs to conform the new regime and exposure to public enforcement costs. Therefore, migrating out of Delaware is costly because of the sunk costs.

316 See Timothy Bresahan & Shane Greenstein, Technical Progress and Co-invention in Computing and in the Uses of Computers, in BROOKINGS PAPERS ON ECONOMIC ACTIVITY- MICROECONOMICS: 1996, 25 (Martin Neil Baily, Peter C. Reiss & Clifford M Winston eds.) (Brookings Institution Press, 1997). 317 See Marshall, Reynolds & McCrory, Server, supra note X, at 17-8. 318 See Lemley & McGowan, Network, supra note 287, at 573. 319 Shane M. Greenstein, Sole-Sourcing versus Competitive Bidding: US Government Agencies' Procedural Choices for Mairiframe Computer Procurement, 43 J. INDUS. ECON. 125 (Jun., 1995). 320 See Bruce Abramson, From Investor Fantasy to Regulatory Nightmare: Bad Network Economics and the Internet's Inevitable Monopolists, 16 HARV. J. LAW & TECH. 159, 180 fn. 47 (Fall, 2002).

47 The power of indeterminate law on regulatory subjects has been known throughout history. The circumstances in which the first written law of the Roman Republic emerged

conform to the tenets of the regulatory competition theory. Roman plebeians, tired of the abuses

made by the patrician ruling class, revolted in 434 B.C. and demanded written codification of then oral and indeterminate customary laws. "The demand was for laws that were certain and

definite, to which all had access."321 The uprising people even threatened exodus from Rome

and establishment of their own city.322 This incident is the first documented voice or exit phenomenon. Delaware corporate law is very indeterminate.323 As inmarkets where customers

are not capable of assessing the benefits of rival systems without actually using it,324

corporations may not assess a jurisdiction without using it. Corporations are not able to assess

the value of their own or those of other jurisdictions laws because of indeterminacy.

Employment of multiple providers in outsourcing reduces agency costs, encourages

competition, and enabling monitoring through benchmarking. 325 Likewise, reinforcement of

choice of law provision instead of internal affairs doctrine will encourage emergence of rival jurisdictions and bring competition to the charter market.

(3) Burdened Corporate Mobility

321 JOHN MAXCY ZANE, THE STORY OF LAW 170 (Kessinger Publishing; 2005) ( 1927). 322 Ibid. 323 See Kamar, Shareholder Litigation, supra note X, at 887. 324 Husham Sharifi, Internet Telephony Carrier Strategies, in INTERNET TELEPHONY, 317 (Lee W. McKnight, William Lehr, & David D. Clark eds.) (MIT Press; 2001). 325 George S. Geis, Business Outsourcing and the Agency Cost Problem, 82 NOTRE DAME L. REV. 955, 862 (March, 2007).

48 More than 80 percent of reincorporating corporations migrate to Delaware in the U.S.326

Corporate migration transactions can be effectuated through reincorporation, domestication and conversion procedures. Domestication and conversion do not affect the existence of the entity, unlike reincorporation transactions realized through merger provisions. 327 The entity will continue enjoying benefits of its constant existence having been deemed to be established on its original establishment date. 328 Therefore, domestication and conversion procedures allow the corporations to change their domicile more conveniently rather than the change of control transactions.

The corporate decision-making process for withdrawing corporations through domestication is subject to the law of the departure state. If withdrawal through domestication out of the host jurisdiction or conversion into a domestic or foreign unincorporated entity or a nonprofit corporation is contemplated, then the board of directors shall decide on the matter and recommend the transaction to its fellow shareholders. Subsequently, the issue shall be submitted to the shareholders' approval. However, there is a vast difference between the Model Business

Corporation Act's (MBCA) and the Delaware General Corporation Law's (DGCL) quorum requirements. The default rule of the MBCA states that the domestication/conversion into foreign jurisdictions may be adopted by a majority of the shareholders entitled to vote.329 In contrast, Delaware requires the approval of the entire voting and non-voting shareholders.330

326 See Romano, Product, supra note 22, at 244. 327 Consolidated corporations in a statutory merger lose their corporate identity and their existence is ceased. See DEL. CODE ANN. tit. 8, § 259(a) (2005); MODEL BUS. CORP. ACT § 1 l.07(a)(2) (2002). 328 For instance the entity should be the identical taxpayer in order to get benefits of the so-called 1031 exchanges. See 26 U.S.C. § I 031 (2005) and relevant IRS/U.S. Treasury regulations. 329 MODEL BUS. CORP. ACT§ 9.21(5), 9.31(5) & 9.52(5) (2002). This minimum requirement may be set higher. See, Id., at§ 9.21(3), 9.31(3) & 9.52(3) (2002). 330 DEL. CODE ANN. tit. 8, § 266(b) (2005).

49 Delaware practically prohibits domestication to other jurisdictions. A single shareholder of a very large public company has the power to veto such domestication/conversion transactions.

Delaware's behavior may be explained by an intention to protect the volume of its corporate citizens. Delaware has market power in the corporate charter market enabling it to charge supracompetitive franchise taxes. 331 A justification for protecting investors may not be claimed on this matter as approval of majority of the shareholders entitled to vote is sufficient even for dissolution of a Delaware corporation.332 However, Delaware defers to the foreign jurisdictions' approval requirements which are purposefully less strict when corporations move into Delaware.

In short, Delaware does not treat the corporate ingress and egress equally, favoring ingress and burdening egress.

Market oriented theories fall short in explaining Delaware's unanimous voting statute.

The Delaware statute is a typical monopolistic behavior that unduly burdens interstate commerce rather than an example of competition on the merits in the corporate charter market. Proponents of competitive federalism contend that other states engage in defensive competition against

Delaware, discouraging their domestic corporations from reincorporating in Delaware rather than attracting foreign corporations to their jurisdiction.333 On out of state domestications, Delaware is not as liberal as it is on other matters. After moving into Delaware, corporations do not have the freedom to migrate to jurisdictions outside of Delaware through domestication or conversion.

Delaware should give these corporations the opportunity to conveniently migrate out of

Delaware. Delaware may achieve this objective by decreasing the unanimous voting

331 Marcel Kahan & Ehud Kamar, Price Discrimination in the Market for Corporate Law, 86 CORNELL L. REV. 1205, 1209 (Sept., 200 I). 332 DEL. CODE ANN. tit. 8, § 275(b) (2005). Majority of shareholders' approval also suffice for amendment of the certificate of incorporation in Delaware (Id., at tit. 8, § 242(b)(l) (2005)). 333 See Romano, supra note 4, at 79.

50 requirements for corporations moving out of Delaware. If Delaware wants to protect its shareholders in a less-than-unanimous vote situation, then it may complement the domestication and conversion statute with appraisal rights.

( 4) State-specific Indoctrination

Brand-specific training in the information technology sector creates a lock-in effect for hardware and software customers. 334 This training, unlike common instruction, creates entry barriers in the sale of the imperishable products.335 "With brand-specific training, switching costs rise over time."336 That entrenchment of the brand rises with the duration of the training and the increases in the user acquaintance of a product. 337 The best strategy for rivals is to replicate the entrenched product or to develop a new product that does not need instruction.338

Entrenched producers can maintain their entry barrier by updating their product that needs further instruction. 339

Law school and post-law-school education creates a lock-in effect for the benefit of

Delaware. Delaware's marketing efforts include direct client development through former

Delaware governor's official overseas visits to encourage both incorporation and physical

334 See Shapiro & Varian, Guide, supra note X, at 573. 335 See Id., at 121. 336 See Ibid. 337 See Ibid. 338 See Ibid. 339 See Ibid.

51 340 investment in Delaware, and "elegant dinners" with foreign lawyers at the home of the Chief

Justice of Delaware's Supreme Court. 341 Most importantly, Delaware corporate law is taught in

every law school of the nation. Furthermore, Delaware judges conduct corporate law classes and

seminars in the elite law schools and elite graduate business schools where future law firm

partners and board members are bred. 342 In addition, the market oriented school is very powerful

in these institutions. The law schools in Delaware also reinforce the lock-in effect. Furthermore,

continued education programs for updates in Delaware corporate law are available to lawyers

upon graduation.343 Delaware does not have to invest in this indoctrination process. A rival state

is unlikely to emerge without entering the law school classrooms.

VII. Academic Influence in Corporate Law

(1) Corporate Law Academia's Role

340 See Press Release, Office of the Governor of Delaware, Governor Minner Calls Trip to Germany "A Real Success", (May 22, 2001) available at (Last visited March 10, 2008). 341 See Milford, supra note 123. 342 For instance, Delaware Chancellor Leo Strine Jr. serves as a Austin Wakeman Scott Lecturer on Law in Harvard Law School. (See, (Mar. 12, 2008)). It is the personal view of the author that learning corporate law from Delaware judges is a tremendous opportunity for law school students. 343 CLE programs on Delaware corporate law is available from Delaware State Bar Association or from other private vendors (See, (Last visited: Mar. 12, 2008)).

52 Corporate law scholars have to organize laws in order to reduce the costs of understanding the laws and legal compliance.344 It is important that Delaware justices' opinions be tested in academic discussions.345 However, studies on the substantial corporate law eroded just as the substantive corporate law did.346 That elite scholars and researchers shape the knowledge of a field of science phenomenon is not valid for the legal profession.347 As a result, academic interference is not welcomed in many circles348 although conflict of ideas brings truth and best policies.349 Delaware learned to live with corporate law academia.350

Shareholders may obtain assistance from legal academia m order to protect their interests.351 It was pointed out that neither states nor the federal government responded "to the

344 See Robert D. Cooter, Market Modernization of Law: Economic Development Through Decentralized Law, in ECONOMIC DIMENSIONS IN INTERNATIONAL LAW: COMPARATIVE AND EMPIRICAL PERSPECTIVES, 275, 278 (Jagdeep S. Bhandari & Alan 0. Sykes eds.) (Cambridge: Cambridge University Press, 1997). 345 See E. Norman Veasey, Musings on the Dynamics of Corporate Governance Issues, Director liability Concerns, Corporate Control Transactions, Ethics, and Federalism, 152 U. PA. L. REV. 1007, 1020 (2003). 346 Bayless Mannning, The Shareholder's Appraisal Right: An Essay for Frank Coker, 72 YALE L. J. 223, 245 fn. 37 (1963) (indicating the death of the corporate law scholarship); Gerard Hertig, Corporate Governance in the United States as Seen from Europe, 1998 COLUM. Bus. L. REV. 27 (1998) (stating that "although the United States pioneered the combination of legal, economic, and behavioral analysis of corporate governance (and continues to dominate the field), important internal management issues seem to have been largely ignored by "law and economics" analysts"); Jonathan R. Macey, Legal Scholarship: A Corporate Scholar's Perspective, 41 SAN DIEGO L. REV. 1759, 1762 (2004) (stating that "those law schools with "Law and ... " appoaches to corporate law are better integrated in the universities of which they a part. Moreover, I argue that the trend towards "Law and. . . " scholarship in law schools is an integral part of law schools' efforts to find acceptance within the university community.") 347 See Michael J. Powell, Professional Innovation: Corporate Lawyers and Private Lawmaking, 18 L. & Soc. INQ. 423, 426 (Summer 1993). 348 See, Tamar Lewin, The Corporate-Reform Furor, N.Y. TIMES, June 10, 1982, at (Late City Final Edition) DI, col. 3 (stating that "[w]e don't require four law professors to tell us how to run our business."). 349 "[T]he best test of truth is the power of the thought to get itself accepted in the competition of the market, and that truth is the only ground upon which their wishes safely can be carried out." (See, Keyishian v. Board ofRegents, 385 U.S. 589, 605-606 (1967)). Likewise, "In seeking the truth, let a hundred flowers bloom and a hundred ideas compete." See Mao Tse-Tung, Speech at the Chinese Communist Party's National Conference on Propaganda Work, at 14 (1'1 ed.; 12/3/1957). 350 See Richard F.Corroon, The Proposed New Delaware Corporation Statute, 20 J. LEGAL EDUC. 522, 522 (1967-1968) (indicating that "it [referring to Delaware] is not a particularly new experience to be squeezed by the academics and the SEC") (in brackets added by the author). 351 See Bratton & McCahery, Regulation, supra note 112 at 1889.

53 very intelligent calls of academia. "352 In other words, absence of implementation of academic proposals was interpreted as absence of merit in the proposals. 353 However, academic proposals of federalization would not be accepted at the U.S. Congress because of the political process.354

(2) The Origins of the Sarbanes-Oxley Act

The Sarbanes-Oxley Act355 was adopted in 2002 to respond to several mega-scandals.

Since then, the Sarbanes-Oxley Act has enjoyed worldwide influence. Many countries, such as

Australia,356 France,357 Japan,358 Ontario (Canada),359 and Turkey,360 enacted either parallel

352 See Winter, State Legal System, supra note 11, at 127 (Compared to the role of Delaware's franchise maximization, the role of corporate law academia on the development of U.S. corporate law is minimal.) 353 See Ralph K. Winter, Jr., The Development of the Law of Corporate Governance, 9 DEL. J. CORP. L. 524, 526, 528 (pointing that the business community and academia are not the only source of wisdom; moreover, corporate governance law did not respond the academia as their proposals did not benefit the interest groups). 354 See Kostel, Public Choice, supra note 3, at 2129. 355 See, The Public Company Accounting Reform and Investor Protection Act of 2002, Public Law I 07-204, 116 Stat. 745 (codified as amended in scattered sections of the 15 & 18 U.S.C.). 356 Australia passed the "Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004" to be codified by the states as a part of the [Uniform] Corporations Act of 2001. See for the text, (Last visited Mar. 22, 2008). 357 France published the Law on Financial Security ["Loi de Securite Financiere" ((Loi n°2003-706 August 1st, 2003))] on August 2nd, 2003. See for more information, Jon Burnett & Francis Miard, A French "Sarbanes-Oxley Act" (Loi de Securite Financiere) - Impacts US subsidiaries in France, 1 Le Bulletin - Protiviti (December 22, 2003). See for the official text in French, (Last visited Mar. 22, 2008). 358 Japan enacted "Financial Instruments and Exchange Law" on June 14t1', 2006. See for an overview of the changes, JAP. FIN. SERV. AGEN., NEW LEGISLATIVE FRAMEWORK FOR INVESTOR PROTECTION - "FINANCIAL INSTRUMENTS AND EXCHANGE ACT" (2007) available at (Last visited Mar. 22, 2008). 359 Ontario enacted its Sarbanes-Oxley as a part of broader reforms. The Bill 198 containing such amendments entered into force on Dec. 9, 2002. See, Explanatory Note, Keeping the Promise for a Strong Economy Act (Budget Measures), 2002 available at (making amendments to Section 122 et seq. of the Ontario Securities Act). 360 The former chairman of the Turkish SEC indicated that regulatory amendments made under his leadership were parallel to the principles contained in the Sarbanes-Oxley Act. See, Dogan Cans1zlar, Chairman, Tur. Sec. Exch. 54 legislation or similar regulations. The market oriented school heavily criticized the Sarbanes-

Oxley Act and related regulations because of its rapid promulgation procedure, absence of empirical support and the expansion of the federal government to the state corporate law dornain.361 However, it was apparent that the Sarbanes-Oxley was corning even before the massive scandals. In 1975, Melvin Eisenberg recommended that a majority of board members of a corporation be independent, and improving the accounting policies revealing managerial performance. He proposed that independent audit and accountant be chosen by an independent audit committee rather than that management should possess the discretion to choose among accounting principles. Under this proposal, independent audit committees consisting of outside directors having the authority to choose and discharge independent audit should be established in public corporations.362 SEC's general counsel, Harvey Pitt, recommended establishment of audit committees consisting of independent members in 1978.363 The Metzenbaurn Bill, introduced in

1980, included mandatory audit and nominating committees, following certain prescribed procedures. 364 Professor Schwartz recommended that the SEC impose audit and similar committees by commandeering stock exchanges under Section 19( c) of the 1934 Act. 365 Some states such as Connecticut required an independent audit committee established by outside

Comm., Keynote Address at the The Association of Capital Market Intermediary Institutions of Turkey: The Second Securities Market Arena (Sept. 14-15, 2004) available at (in Turkish) (Last visited March 22, 2008). 361 See Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 YALE L.J. 1521, 1521 et seq. (2005) (criticizing the Sarbanes-Oxley Act for its rapid promulgation and lack of empirical support).

362 See Melvin Aron Eisenberg, Legal Models of Management Structure in the Modern Corporation: Officers, Directors, and Accountants, 63 CAL. L. REV. 375, 436 (1975); Richard W. Jennings, Federalization o/Corporationlaw: Part Way or All the Way, 31 Bus. LAW. 991, 1020 (1976) (agreeing with Eisenberg). 363 See Schwartz, Federalism, supra note 69, at 572 (citing Opinion of SEC General Counsel on the Commission's Authority to Require Public Companies to Establish Independent Audit Committees (March 2, 1978), [1978 Transfer Binder] FED. SEC. L. REP. (CCH) P81,535.). 364 S. 2567, 96th Cong., 2d Sess. (1980). 365 See Schwartz, Federalism, supra note 69, at 573 (citing 15 U.S.C. § 77s-(c) (] 982)).

55 directors. However, this approach has never prevailed among other states.366 The Honorable E.

Norman Veasey recommended corporate boards to establish independently advised audit,

compensation, and nominating committees with all independent members in 2001.367 Federal

corporate law will continue to grow unless the states prevent further abuses. 368

Commentators in legislation academia are deemed to participate in the rule making if

their proposals are utilized by the regulators. 369 Many proposals from the academic front on

corporate law are not adopted. 370 However, the government discipline school saw application of

its proposals in mandatory disclosure front, 371 in the Sarbanes-Oxley Act. In contrast, ideas of the market oriented school still continue in the state competition domain.

CONCLUSION

366 See Schwartz, Federalism, supra note 69, at 555 (citing Conn. Gen. Stat. Ann. § 33-3 l 8(b) (West Supp. 1984). 367 Honorable E. Norman Veasey' s seven recommendations include: (1) Majority of the board be independent, (2) Active not passive board, (3) More frequent board meetings, (4) Directors should serve on less boards, (5) Independently advised audit, compensation, and nominating committees with all independent members, (6) Establishment of a "reasonable" compliance programs, (7) Actual board review of disclosure documents (See E. Norman Veasey, Should Corporation Law Inform Aspirations for Good Corporate Governance Practices - Or Vice Versa?, 149 U. Pa. L. Rev. 2179, 2190-91 (2001)). See also E. Norman Veasey, State-Federal Tension in Corporate Governance and the Professional Responsibilities ofAdvisors, 28 J. CORP. L. 441, 463 (2003) (stressing importance of audit, compensation, and nominating committees consisting of independence members (citing Committee on Corp. Laws, ABA, Corporate Directors Guidebook - 1994 Edition, 49 Bus. L. 1243, 1262-74 (1994))); E. Norman Veasey, An Economic Rationale for Judicial Decisionmaking in Corporate Law, I DEL. L. REV. 169, 191-2 (1998). 368 See Jennings, Federalization, supra note 362 at 1020-1. 369 See Clark, Elites, supra note 191, at 1713. 370 See Joel Seligman, A Modest Revolution in Corporate Governance, 80 NOTRE DAME L. REV. 1159, 1184 (2004- 2005). 371 See Stephen M. Bainbridge, Mandatory Disclosure: A Behavioral Analysis, 68 U. CIN. L. REV. 1023, 1023 (2000).

56 Changes in the composition of Delaware's economy will significantly impact Delaware corporate law. These changes could impact Delaware's regulatory stance against the corporations, although this is not seen as a possibility. Delaware's marketing efforts include encouraging not only Delaware incorporation but also physical investment. 372 An emerging labor class can push for a strong anti-takeover statute.

A jurisdiction can prove itself to legal practitioners and corporations with its case law. 373

Delaware jurisprudence provides a menu satisfying the appetites of the government discipline school,374 interest group theory,375 federal threat,376 pro-management,377 density dependent view,378 and shareholder protective perspective.379 None of the existing theories fully grasps a

372 See Press Release, Office of the Governor of Delaware, Governor Minner Calls Trip to Germany "A Real Success", (May 22, 2001) available at (Last visited March 10, 2008). 373 See Klausner, Networks, supra note 16, at 845 (stating that "[w]ithout a base of corporate domiciliaries comparable in size to Delaware's, no other state can offer the prospect of such an extensive and timely body of case law." 374 The government discipline school points out these cases for their insufficiency of investor protection: Mansfield 1 Hardwood Lumber Co. v. Johnson, 268 F.2d 317 (5 h Cir.), cert. denied, 361 U.S. 885 (1959) (on squeeze outs); Chejfv. Mathes, 41 Del. Ch. 494, 199 A.2d 548 (1967) (on takeovers); American Hardware Corp. v. Savage Arms Corp., 37 Del. Ch. 59, 136 A.2d 690 (1957) (on proxy disclosure); Keller & Wilson & Co., 21 Del. Ch. 391, 190 A. 115 (1936) (on denying accrued dividends to shareholders); Hariton v. Arco Electronics, Inc., 41 Del. Ch. 74, 188 A.2d 123 (1963) (on de facto merger theory); Sinclair Oil Corp. v. Levien, 280 A.2d 717 (Del. 1971) (on parent subsidiary merger); Getty Oil Co. v. Skelly Oil Co., 267 A.2d 883 (Del. 1970) (on parent subsidiary merger); Graham v. Allis-Chalmers Manufacturing Co., 40 Del. Ch. 335, 182 A.2d 328 (Ch. 1962) (duty of care of directors) (See Cary, Reflections, supra note 68, at 672-84). 375 The interest group theory school pointes out these cases as Delaware interest groups are the beneficiaries of their respective outcomes: Zapata Corp. v. Maldonado, 430 A.2d 779 (Del. 1981) (on derivative suits); Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985) (on directors' duty of care in merger transactions); Moran v. Household International Inc., 490 A.2d 1059 (Del. Ch. 1985), ajj'd, 500 A.2d 1346 (Del. 1985) (on the validity of the poison pill) (See Macey & Miller, IGT, supra note 6, at 515-19). 376 Proponents of the federal threat theory points out that Delaware adopted Unocal and Revlon doctrines because of the federalization threat in the 1980s (See Griffith, Good Faith, supra note 208, at 67). 377 See Schlensky v. Wrigley, 95 III. App. 2d 173, 237 N.E.2d 776 (1968). 378 Density dependent view does not predict the outcome of state cases. It maintains that the value of precedent is related to the number of firms adopting such precedent (See, See Klausner, Networks, supra note 16, at 757 et seq.). 379 See, Smith v. Van Gorkom, 488 A.2d 858, 873-81 (Del. 1985); Cede & Co. v. Technicolor, Inc., 634 A.2d 345, 366-71 (Del. 1993).

57 multi-faceted regime in corporate law. 380 This study contributes to the existing research by attempting to explain the entry barriers. The positive law will always fall short of the natural law.

By eliminating the entry barriers through unencumbered relocation, positive corporate law will approach closer to natural law.

380 See Loewenstein, Polemic, supra note 198, at 524.

58 Georgetown University Law Center Doctor of Juridical Science Program

A COMPARATIVE BIBLIOGRAPHY: REGULATORY COMPETITION IN CORPORATE LAW

Necip Kagan Kocaoglu (pronounced Cahn Kojaolu) LL.M. (2004, Virginia), LL.M. (2001, Ankara)

This comparative bibliography compiles the contributions made by lawyers, economists, and judges on the role of regulatory competition on corporate laws. Academicians of American corporate law have discussed the effects of regulatory competition on corporate laws for over the last three decades. The span and the range of this continuing debate have brought a great deal of attention to this issue. Literature on theoretical :framework of the regulation competition, corporate law federalism, corporate mobility, proposed corrections to charter market, federal interventions to corporate law and European contributions to the academic discourse are covered in this compilement.

A COMPARATIVE BIBLIOGRAPHY: REGULATORY COMPETITION ON CORPORATE LAW

KAGAN KOCAOGLU

INTRODUCTION

Academicians of American corporate law have discussed the effects of regulatory competition for over the last three decades. The span and the range of the debate have brought a great deal of scholarship on this issue. This comparative bibliography selects and indexes the contributions made by lawyers, economists, and judges on the role of the regulatory competition on corporate laws.

Substantial state corporate codifications, landmark state corporate law cases, and federal intervention in the domain of state corporate law increase the magnitude of the academic works. Interdisciplinary studies (i.e. law and economics) became a connection device among legal academia and non-legal disciplines. 1 Likewise, regulatory competition studies became a socializing device and a mechanism for breaking into the corporate-law academia. Therefore, emergence of new corporate law scholars also affects the multitude of works significantly.

The popularity of the study of corporate law regulatory competition has spread overseas from the United States. In effect, the academic discourse in the U.S. alters the European research agenda. A new academic market for regulatory competition has been introduced and expanded throughout Europe. Although it is unlikely that a European Delaware will emerge, European academia is likely to contribute more to the academic discourse.

I Jonathan R. Macey, Legal Scholarship: A Corporate Scholar's Perspective, 41 San Diego L. Rev. 1759, 1762 (2004). In spite of the depth and breadth of the discussion, some aspects of regulatory competition in corporate law are still neglected. It is interesting that the corporate law academia has stayed quiet against the promulgation of Chapter 9 of the Model Business Corporation Act, a regulation which is decreasing the costs associated with corporate mobility, corporate conversions in the healthcare sector, outbound tax inversions and the Congressional response against tax inversions. Nevertheless, the academic neglect of this topic is understandable as the Sarbanes-Oxley Act has largely occupied academia's attention. This bibliography covers these topics, however, as they are directly linked to the heart of the regulatory competition in corporate law.

The bibliography has been divided into four chapters. First chapter analyzes the interrelationship between regulatory competition and corporate law. It addresses the goals and limits of the law, inter-jurisdictional competition on business organization laws, federalism, selection of the legal platform of a business organization, legal and economic factors affecting such selection, and transactions effectuated in order to perform a jurisdictional change. Some independent subjects concerning corporate mobility, such as appraisal rights, are not covered. The second chapter focuses on charter competition literature in the United States. Its themes include the historical development of the charter market, the political foundations and dynamics of the U.S. charter market, the clash between the government discipline school and the market discipline school, dimensions of the charter market and empirical studies on shareholder wealth. The third chapter is on the proposed remedies to the charter market failure. This chapter collects literature about the boundaries of congressional authority, federalization of the corporate law proposals, opinions supporting and opposing the federalization, and federal interventions to the corporate law.

The final chapter accumulates the comparative side of the discussion. This chapter focuses on primarily the European Union and other major federations. Harmonization, regulatory competition, and corporate mobility within the European

11 Union in addition to literature on the European Company (Societas Europaea), the role of the takeover market in the European Union and the development of European jurisprudence on corporate mobility are covered in the final chapter. This chapter finishes with selected studies on individual countries.

The dynamics that shape the regulatory competition in corporate law determine the outlook of corporate law. Therefore, corporate practitioners will largely benefit if the entire dynamics of the state competition in the charter market were definitively solved. However, we are still far away from this point as the law and economics approach is still in early stage of development and is not yet mature enough to solve the mysteries of the regulatory competition. In addition, differences in view2 complicate reconciliation efforts between schools of thought. Thus, the discussion is not likely to fade and regulatory competition issues still prove to be a fertile setting for academic writing.

Kagan Kocaoglu, Esq.

2 In fact, most commentators indicate that the current academic debate results from the differences in the world views rather than impending corporate law issues (See, Seymour J. Rubin, Corporations and Society: The Remedy of Federal and International Incorporation, 23 Am. U. L. Rev. 263, 288 (1969) (indicating that "[a] substantial problem is the divisiveness of the case for federal chartering"); Roberta Romano, Metapolitics and Corporate Law Reform, 36 Stan. L. Rev. 923, 25 (1984) (stating that "many controversies over corporate law reform can be explained as pertaining to fundamental political disagreements")).

111 (2) BANKRUPTCY COMPETITION ...... 24 (3) COMPETITION FOR TRUST FUNDS ...... 24 (4) REGULATORY COMPETITION IN TRANSNATIONAL FINANCE ...... 24

II. CHARTER MARKET COMPETITION ...... 25

A. PRODUCTS IN THE CHARTER MARKET ...... 25 (1) DELAWARE CORPORATE LAW ...... 25 (2) MODEL BUSINESS CORPORATION ACT ...... 25 (3) NON-DELAWARE STATE CORPORATE LAWS ...... 26 (4) EUROPEAN PRODUCTS ...... 26 B. HISTORICAL DEVELOPMENT OF THE CORPORATE CHARTER MARKET ••••••••••••••••••••••••••••• 26 (1) HISTORICAL PROGRESS ...... 26 (2) RETROSPECTIVE PERSPECTIVES ...... 30 (3) PATH DEPENDENCY ...... 30 C. DOCTRINAL FOUNDATIONS ••••••••••••••••••••••••••••••••••••••••••••••••.•••••••••••••••••••••••••.••.••••.•••••••••••••••••• 30 (1) GOVERNMENT DISCIPLINE SCHOOL (RACE TO THE BOTTOM) ...... 30 (2) ANTI-BUSINESS SENTIMENT ...... 32 (3) BANKRUPTCY REFORM ...... 32 ( 4) MARKET DISCIPLINE SCHOOL (RACE TO THE TOP) ...... 33 (5) INTERMEDIATE VIEWS ...... 34 D. POLITICAL FOUNDA TIO NS OF THE CHARTER MARKET ...... 35 (1) REGULATORY HOSTAGE THEORY ...... 35 (2) INTEREST GROUP THEORY ...... 35 (3) THE LAWYER'S ROLE IN CORPORATE GOVERNANCE ...... 38 ( 4) CORPORATE LAW DRAFTING PROCESS ...... 39 (5) POLITICAL FOUNDATIONS OF CORPORATE GOVERNANCE ...... 39 (6) PUBLIC CHOICE THEORY ...... 39 (7) DEMOCRACY AND CHARTER COMPETITION ...... 40 E. DIMENSIONS OF CHARTER MARKET ...... 40 (1) CHARTER MARKET DYNAMICS ...... 40 (2) INNOVATION IN BUSINESS ORGANIZATIONS LAW ...... 41 (3) DENSITY DEPENDENT VIEW (NETWORK EFFECTS THEORY) ...... 41 (4) SYMBIOTIC FEDERALISM AND THE DUAL CONTROL OF THE CORPORATIONS ...... 42 (5) CORPORATE GOVERNANCE CONVERGENCE ...... 43 (6) TAKEOVER MARKET DYNAMICS ...... 44 (7) THE ROLE OF JUDICIARY ...... 48 (8) CHARTER MARKET FAILURE ...... 51 (A) STRENGTH OF COMPETITION IN THE CHARTER MARKET ...... 51 (B) PRICE DISCRIMINATION ...... 51 ( C) INDETERMINACY ...... 51 (9) MOBILITY IN THE CHARTER MARKET ...... 51 (A) HOME STATE BIAS ...... 51 (B) HERD BEHAVIOR ...... 52 (10) MORAL & CULTURAL DIMENSIONS ...... 52 F. EMPIRICAL STUDIES ON SHAREHOLDERS' WEALTH...... 52 ( 1) MODELS ...... , .. ·...... , ...... ,., .. ·...... , ...... ·...... 52 (2) STATE COMPETITION ...... 53 (3) REINCORPORATION EFFECTS ...... 53 (4) DELAWARE JUDICIAL DECISIONS' ROLE ...... 54

11 (5) TAKEOVER MARKET'S ROLE ...... 54

III. FEDERALIZATION OF THE CORPORATE LAW ...... 55

A. THE EXTENT OF CONGRESSIONAL AUTHORITY ...... 55 B. FEDERALIZATION MOVEMENTS ...... 56 (1) CONGRESSIONAL MOVEMENTS ...... 56 (2) HARMONIZATION PROPOSALS ...... 57 (3) FEDERALIZATION PROPOSALS ...... 57 (4) FEDERAL EXPANSION IN CORPORATE LAW ...... 58 C. VIEWS ON THE FEDERALIZATION OF THE CORPORA TE LAW ...... 59 (1) CALLS FOR FURTHER ASSESSMENT OF THE FEDERALIZATION ...... 59 (2) SUPPORT FOR FEDERALIZATION ...... 60 (3) SUPPORT FOR A LIMITED FEDERAL INTERFERENCE ...... 61 (4) OPPOSITION TO FEDERALIZATION ...... 61 (5) INTERMEDIATE ASSESSMENTS ...... 62

IV. COMPARATIVE LAW ...... 63

A. EUROPEAN UNION ...... 63 ( 1) CORPORATE GOVERNANCE: THE EUROPEAN UNION VS. THE UNITED STA TES ...... 63 (2) GOVERNANCE OF THE EUROPEAN CORPORATE GOVERNANCE ...... 63 (A) EUROPEAN UNION FEDERALISM ...... 63 (B) SUBSIDIARITY ...... 63 (C) THE ROLE OF POLITICS IN THE EUROPEAN UNION ...... 64 (3) CORPORATE-LAW PRODUCTION IN THE EUROPEAN UNION ...... 64 (A) REGULATORY COMPETITION ...... 64 (B) COMPANY LAW HARMONIZATION ...... 67 ( C) EUROPEAN TAKEOVER MARKET ...... 71 (D) EUROPEAN INSOLVENCY FORUM COMPETITION ...... 73 (E) DELAWARIZATION FEARS ...... 74 (4) FORUM SELECTION IN THE EUROPEAN UNION ...... 75 (A) CHOICE OF LAW WITHIN THE EUROPEAN UNION ...... 75 (B) CONFLICT OF LAWS RULES WITHIN THE EUROPEAN UNION ...... 75 (C) FOREIGN COMPANY RECOGNITION ...... 75 (D) CORPORATE MOBILITY WITHIN THE E.U ...... 76 (E) THE EUROPEAN COMPANY (SOC/ETAS EUROPAEA) ...... 78 (F) THE EUROPEAN PRIVATE COMP ANY ...... 81 (5) DEVELOPMENT OF THE EUROPEAN JURISPRUDENCE ...... 81 (A) IN GENERAL ...... 81 (B) CENTROS ...... 82 (C) UBERSEERING ...... 84 (D) INSPIRE ART ...... 84 (E) HUGHES DE LASTEYRIE DU SAIL LANT ...... 85 (F) MARKS & SPENCER ...... 86 (G) SEVIC ...... 86 B. AUSTRALIA ...... 86 c. CANADA ...... 87 D. CHINA ...... 87

111 E. GERMANY·································································································································88 F. ITALY········································································································································88 G. JAPAN ...... •...... •...... •...... 88 H. SWITZERLAND ...... 88 I. EMERGING MARKETS ...... 88

INDEXES ...... 89

INSTITUTIONS INDEX ...... 89 AUTHOR INDEX ...... 89

IV I. REGULATORY COMPETITION AND CORPORATE LAW

A. The Role of Corporate Law

(1) In General

(2) Henry Hansmann & Reinier Kraakman, The Essential Role of the Organizational Law, 110 Yale L. J. 387, 391 (Dec., 2000). (3) Zohar Goshen & Gideon Parchomovsky. The Essential Role of Securities Regulation, 55 Duke L.J. 711-782 (2006).

(2) Law Matters Theory

(4) Ernest L. Folk, III, Does State Corporation Law Have a Future?, J. Ga, S. B. 311 (Feb. 1972). (5) John E. Coffee, Jr., Do Norms Matter--A Cross-Country Evaluation, 149 U. Pa. L. Rev. 2151 (2000-2001). ( 6) Kon-sik Kim & Joongi Kim, Revamping Fiduciary Duties in Korea: Does Law Matter to Corporate Governance, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 372 (Curtis J. Milhaupt eds., New York: 2003).

(3) Boundaries of the Law

(7) Bernard S. Black, Is Corporate Law Trivial?: A Political and Economical Analysis, 84 Nw. U. L. Rev. 542 (1990). (8) Martin Lipton, Corporate Governance: Does it Make a Difference, 2 Fordham Fin. Sec. Tax L. F. 41 (1997). (9) Mark J. Roe, Rents and Their Corporate Consequences, 53 Stan. L. Rev. 1463 (2001). (10) Symposium Norms & Corporate Law: Marcel Kahan, The Limited Significance of Norms/or Corporate Governance, 149 U. Pa. L. Rev. 1869, 1878 fn. 35 (June, 2001). (11) Mark J. Roe, Corporate Law's Limits, 31 J. Leg. Stud. 233 (2002).

1 (12) Mark J. Roe, What Corporate Law Can Not Do?, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 107 (Curtis J. Milhaupt eds., New York: 2003). (13) Michael Klausner, The Limits of Corporate Law in Promoting Good Corporate Governance, in RESTORING TRUST IN AMERICAN BUSINESS, 91 (Jay w. Lorsch, Leslie Berlowitz, & Andy Zelleke eds.) (MIT Press; 2005). (14) Luca Enriques, EC Company Law Directives and Regulations: How Trivial are They?, 27 U. Pa. J. Int'l Econ. L. 1 (Spring, 2006).

(4) Law vs. Markets

(15) JAMES WILLARD HURST, LAW AND MARKETS IN UNITED STATES HISTORY: DIFFERENT MODES OF BARGAINING AMONG INTERESTS (The Law Book Exchange 2001) (1982). (16) NICHOLAS WOLFSON, THE MODERN CORPORATION: FREE MARKETS V. REGULATION (Free Press 1984). (17) Edward S. Herman, The Limits of the Market as a Discipline in Corporate Governance, 9 Del. J. Corp. L. 530 (Spring, 1985). (18) Frank H. Easterbrook, The Constitution of Business, 11 Geo. Mason L. Rev. 53 (1988). (19) Bernard Black & Reinier Kraakman, A Self-Enforcing Model of Corporate Law, 109 Harv. L. Rev. 1911 (Jun., 1996). (20) Frank H. Easterbrook, International Corporate Differences: Markets or Law?, 9 J. Applied Corp. Finance 23 (Winter 1997). (21) Kerry Shannon Burke, Regulating Corporate Governance through the Market: Comparing the Approaches of the United States, Canada and the United Kingdom 27 J. Corp. L. 341 (2001-2002). (22) Stephen J. Choi, Law, Finance, and Path Dependence: Developing Strong Securities Markets, 80 Tex. L. Rev. 1657 (2002). (23) Vladimir A. Atanasov, Bernard S. Black, Conrad S. Ciccotello, & Stanley Gyoshev, How Does Law Affect Finance? An Empirical Examination of Tunneling in an Emerging Market (William Davidson Institute Working Paper No. 742; 2005) available at< http://ssrn.com/ abstract=423506> (24) Horst Siebert, Corporatist versus Market Approaches to Governance, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 281 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (25) Anthony I. Ogus, Regulatory Paternalism: When is it Justified?, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, ST ATES, AND MARKETS IN EUROPE,

2 JAPAN, AND THE US, 303 (Klaus J. Hopt, Eddy Wyrneersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (26) Davide Lombardo & Marco Pagano, Law and Equity Markets: A Simple Model, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 343 (Joseph McCahery ed.) (Oxford University Press; 2002). (27) Enrico Perotti & Ernst-Ludwig von Thadden, Investor Dominance and Strategic Transparency: on the Role of the Corporate Governance for Product and Capital Market Competition, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 363 (Joseph McCahery ed.) (Oxford University Press; 2002).

B. Regulatory Competition

(1) Theoretical Framework

(28) Friedrich A. Hayek, The Use of Knowledge in Society, 35 Arn. Econ. Rev. 519 (Sep. 1945). (29) Charles M. Tiebout, A Pure Theory of Local Expenditure, 64 J. Pol. Econ. 416 (1956). (30) James M. Buchanan, An Economic Theory ofClubs, 32 Econornica 1 (Feb., 1965). (31) ALBERT 0. HIRSCHMAN, EXIT, VOICE AND LOYALTY: RESPONSES TO DECLINE IN FIRMS, ORGANIZATIONS, AND STATES (Harvard 1970). (32) William J. Baumol & Alfred G. Walton, Full Costing, Competition and Regulatory Practice, 82 Yale L. J. 639 (1972-1973). (33) Albert 0. Hirschman, "Exit, Voice, and Loyalty": Further Reflections and a Survey of Recent Contributions, 1 Soc. Sci. Inf. 7 (1974). (34) Oliver E. Williamson, The Economics of Internal Organization: Exit and Voice in Relation to Markets and Hierarchies, 66 Arn. Econ. Rev. 369 (May, 1976). (35) Albert 0. Hirschman, Exit, Voice, and the State, 31 World Pol. 90 (Oct., 1978). (36) Wallace E. Oates & Robert M. Schwab, Economic Competition Among Jurisdictions: Efficacy Enhancing or Distorting Inducing, 35 J. Pub. Econ. 333 (1988). (37) ALBERT BRETON, COMPETITIVE GOVERNMENTS: AN ECONOMIC THEORY OF POLITICS AND PUBLIC FINANCE (Cambridge University Press: 1996). (38) William W. Bratton & Joseph A. McCahery, The New Economics of Jurisdictional Competition: Devolutionary Federalism in a Second-Best World, 86 Geo. L.J. 201 (1997). (39) Alan 0. Sykes, Regulatory Competition or Regulatory Harmonization - A Silly Question, 3 J. Int'l Econ. L. 257 (2000).

3 ( 40) Stanley L. Winer, On the Reassignment of Fiscal Powers in a Federal State, in COMPETITION & STRUCTURE: THE POLITICAL ECONOMY OF COLLECTIVE DECISIONS: ESSAYS IN HONOR OF ALBERT BRETON 239 (Gianluigi Galeotti, Pierre Salmon & Ronald Wintrobe eds.) (Cambridge University Press: 2000). (41) Catherine Barnard & Simon Deakin, Market Access and Regulatory Competition, in THE LAW OF THE SINGLE EUROPEAN MARKET: UNPACKING THE PREMISES 197 (Catherine Barnard & Joanne Scott eds., Oxford: 2002) (42) Shyam Sunder, Standards for Corporate Financial Reporting: Regulatory Competition Within and Across International Boundaries, 21 J. Acct. & Pub. Pol. 219 (Autumn 2002) (43) Wolfgang Kerber & Klaus Heine, Institutional Evolution, Regulatory Competition and Path Dependence, in THE EVOLUTIONARY ANALYSIS OF ECONOMIC POLICY, 191 (Pavel Pelikan & Gerhard Wegner eds.) (Edward Elgar Publishing, 2003). (44) Andras Kisfaludi, Corporate Governance and the Shareholders' Right to Exit (Theoretical Questions and Legislative Answers from Hungary), 16 Eur. Bus. L. Rev. (EBLR) 1367 (2005). (45) Dale D. Murphy, Interjurisdictional Competition and Regulatory Advantage, 8 J. Int'l Econ. L. 891 (Dec., 2005). (46) Dale D. Murphy, The Business Dynamics of Global Regulatory Competition, in DYNAMICS OF REGULATORY CHANGE: How GLOBALIZATION AFFECTS NATIONAL REGULATORY POLICIES (David Vogel & Robert A. Kagan eds.) (Dec., 2004). (47) James W. Williams, Private Legal Orders: Professional Markets and the Commodification ofFinancial Governance, 15 Soc. & Leg. Stud. 209 (2006).

(2) Decentralized Legal Systems

(48) Mancur Olson, Jr., The Principle of "Fiscal Equivalence": The Division of Responsibilities among Different Levels of Government, 59 Am. Econ. Rev. 479 (May, 1969) (49) George J. Stigler, The Optimum Enforcement of Laws, 78 J. Pol. Econ, 526 (May - Jun., 1970). (50) George J. Stigler, The Theory of Economic Regulation, 2 Bell J. Econ. & Manag. Sci. 3 (Spring, 1971 ). (51) Robert D. Cooter, Decentralized Law for a Complex Economy: The Structural Approach to Adjudicating the New Law Merchant, 144 U. Pa. L. Rev. 1643 (May, 1996) (52) Robert D. Cooter, The Structural Approach to Decentralizing Law: A Theory of Games and Norms, in EUROPEAN ECONOMIC AND BUSINESS LA w: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION 341 (Richard M. Buxbaum, Gerard Hertig, Alain Hirsch & Klaus J. Hopt, eds.: 1996) 4 (53) Robert D. Cooter, Market Modernization of Law: Economic Development Through Decentralized Law, in Jagdeep S. Bhandari & Alan 0. Sykes (eds.), ECONOMIC DIMENSIONS IN INTERNATIONAL LAW: COMPARATIVE AND EMPIRICAL PERSPECTIVES 275 (Cambridge: Cambridge University Press, 1997). (54) Albert Breton, Alberto Cassone, & Angela Fraschini, Decentralisation and Subsidiarity: Toward a Theoretical Reconciliation, 19 U. Pa. J. Int'l Econ. L. 1 (1998). (55) Richard M. Bird, Fiscal Decentralization and Competitive Governments, in COMPETITION & STRUCTURE: THE POLITICAL ECONOMY OF COLLECTIVE DECISIONS: ESSAYS IN HONOR OF ALBERT BRETON 129 (Gianluigi Galeotti, Pierre Salmon & Ronald Wintrobe eds.) (Cambridge University Press: 2000). (56) Robert D. Cooter, The Optimal Number of Governments for Economic Development, in MARKET-AUGMENTING GOVERNMENT : THE INSTITUTIONAL FOUNDATIONS FOR PROSPERITY, Omer Azfar & Charles A. Cadwell eds. (2003)

(3) Intragovernmental Competition

(57) J.R. DeShazo & Jody Freeman, The Congressional Competition to Control Delegated Power, 81 Tex. L. Rev. 1443, 1456 (2003).

(4) Regulatory Competition in Corporate Law

(58) Ronald J. Daniels, Should Provinces Compete? The Case for a Competitive Corporate Law Market, 36 McGill L. J. 130 (1991). (59) William J. Camey, Explaining the Shape of Corporate Law: The Role of Competition, 18 Manage. Decis. Econ. 611 (1997). (60) William J. Camey, Federalism and Corporate Law: Conditions for Optimal Development (Sept. 22, 1994) (unpublished manuscript, on file with the Virginia Law Review Association). (61) Brian Cheffins, "User Friendly" Corporate and Securities Law in Canada: The Role of Competitive Federalism and Mutual Recognition, in THE FUTURE OF CORPORATION LA w: ISSUES AND PERSPECTIVES, 53 (Toronto: Carswell, 1999). (62) Daniel C. Esty, Regulatory Competition in Focus, 3 J. Int'l Econ. L. 215 (2000). (63) Daniel C. Esty & Damien Geradin, Regulatory Co-Opetition, 3 J. Int'l Econ. L. 235 (2000). (64) Mark D. West, The Puzzling Divergence of Corporate Law: Evidence and Explanations from Japan and the United States, 150 U. Penn. L. Rev. 527 (Dec., 2001).

5 (65) Stephen J. Choi & Andrew T. Guzman, Choice and Federal Intervention in Corporate Law, 87 Va. L. Rev. 961 (Sept., 2001). (66) John E. Coffee, Jr., Law and Regulatory Competition: Can They Co-Exist, 80 Tex. L. Rev. 1729 (2001-2002). (67) ERIK P. M. VERMEULEN, THE EVOLUTION OF LEGAL BUSINESS FORMS IN EUROPE AND THE UNITED: VENTURE CAPITAL, JOINT VENTURE AND PARTNERSHIP STRUCTURES, 71- 99 (Kluwer Law International, 2003). (68) Wolfgang Kerber & Klaus Heine, Institutional Evolution, Regulatory Competition and Path Dependence, in THE EVOLUTIONARY ANALYSIS OF ECONOMIC POLICY, 191 ( Pavel Pelikan & Gerhard Wegner) (Edward Elgar Publishing; 2005). (69) Eva-Maria Kieninger, The Legal Framework of Regulatory Competition Based on Company Mobility: EU and US Compared - Part 1/11, 6 German L. J. (Apr., 2005) available at (70) Edward Rock & Mitchell Kane, Taxes and Charter Competition (U of Penn, Inst for Law & Econ Research Paper No. 07-16, 2007), available at

(5) Tax Competition and the Role of Taxation on Corporate Governance

(71) Edward Rock & Mitchell Kane, Taxes and Charter Competition (U of Penn, Inst for Law & Econ Research Paper No. 07-16, 2007), available at (72) John D. Wilson, A Theory of Interregional Tax Competition, 19 J. Urb. Econ. 296 (1986). (73) Saul Levmore, The Positive Role of Tax Law in Corporate and Capital Markets, in CORPORATE LAW AND ECONOMIC ANALYSIS, 255 (Lucian A. Bebchuk ed.) (Cambridge University Press, 1990). (74) Sol Picciotto, The Construction of International Taxation, in PROFESSIONAL COMPETITION AND PROFESSIONAL POWER: LAWYERS, ACCOUNTANTS AND THE SOCIAL CONSTRUCTION OF MARKETS 25 (Yves Dezalay & David Sugarman eds.) (New York: Routledge, 1995). (75) John D. Wilson, Theories of Tax Competition, 52 Nat'l Tax J. 269 (1999). (76) Daniel Shaviro, Some Observations Concerning Multijurisdictional Tax Competition, in REGULATORY COMPETITION AND ECONOMIC INTEGRATION: COMPARATIVE PERSPECTIVE, 49 (Daniel C. Esty & Damien Geradin eds.) (Oxford University Press; Feb., 2001). (77) William W. Bratton & Joseph McCahery, Tax Coordination and Tax Competition in the European Union: Evaluating the Code of Conduct on Business Taxation, 38 Comm. Mar. L. Rev. 677 (2001).

6 (78) Thomas Bernauer & Vit Styrsky, Adjustment or Voice? Corporate Responses to International Tax Competition, 10 Eur. J. Int'l Rel. 61 (2004). (79) Katharina Holzinger, Tax Competition and Tax Co-Operation in the EU: The Case of Savings Taxation, 17 Rat. & Soc. 475 (Nov., 2005). (80) Wolfgang Schon, Playing Different Games? Regulatory Competition in Tax and Company Law Compared, 42 Comm. Mar. L. Rev. (CMLR) 331 (2005).

(6) Investment Promotion

(81) Ehud Kamar, Beyond Competition/or Incorporations, 94 Geo. L.J. 1725 (2005-2006) (a form of regulatory competition exists for investments). (82) STEVEN K. VOGEL, JAPAN REMODELED: How GOVERNMENT AND INDUSTRY ARE REFORMING JAPANESE CAPITALISM (Cornell University Press; Ithaca, 2006). (83) Ehud Kamar, Using Corporate Law to Compete for Investments, in INVESTOR PROTECTION IN EUROPE: CORPORATE LAW MAKING, THE MIFID AND BEYOND, 59 (Guido Ferrarini & Eddy Wymeersch eds.) (Oxford: Oxford University Press; 2006).

C. Selection of the Legal Platform

(1) Regulatory Arbitrage

(84) EDWARD H. WARREN, CORPORATE Aov ANT AGES WITHOUT INCORPORATION (1929). (85) Notes, Investor Liability: Financial Innovations in the Regulatory State and the Coming Revolution in Corporate Law, 107 Harv. L. Rev. 1941, (Jun., 1994). (86) Amir N. Licht, Regulatory Arbitrage for Real: International Securities Regulation in a World ofInteracting Securities Markets, 38 Va. J. Int'l L. 563 (Summer 1998).

(2) Private International Law of Companies

(87) WILLIAM LAW MURFREE, LAW OF FOREIGN CORPORATIONS: A DISCUSSION OF THE PRINCIPLES OF PRIVATE INTERNATIONAL LAW AND LOCAL STATUTORY REGULATIONS APPLICABLE TO TRANSACTIONS OF FOREIGN COUNTRIES (Central Law Journal Co.: 1893).

7 (88) AMIN M. BADR, ALIEN CORPORATIONS IN CONFLICT OF LAWS: A STUDY OF COMPARATIVE LA w (Cairo, Egypt: 1953) (89) Daniel Zimmer, Private International Law of Business Organizations, 1 Eur. Bus. Org. L. Rev. (EBOR) 585 (2000) (90) STEPHAN RAMMELOO, CORPORATIONS IN PRIVATE lNTERNA TIONAL LA w: A EUROPEAN PERSPECTIVE (Oxford University Press, 2001). (91) Peter B. Oh., A Jurisdictional Approach to Collapsing Corporate Distinctions, 55 Rutgers L. Rev. 389 (2003).

(5) Transnational Regulatory Competition

(92) Joel P. Trachtman, International Regulatory Competition, Externalization, and Jurisdiction, 34 Harv. Int'l. L. J. 47 (1992). (93) Sol Picciotto, The Regulatory Criss-Cross: Interaction between Jurisdictions and The Construction of Global Regulatory Networks, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 89 (McCahery, Bratton, Picciotto, Scott eds., New York: 1997). (94) Joel P. Trachtman, Externalities and Extraterritoriality: The Law and Economics of Prescriptive Jurisdiction, in ECONOMIC DIMENSIONS IN INTERNATIONAL LA w (Jagdeep Bhandari & Alan 0. Sykes eds.) (1997). (95) Joel P. Trachtman, Regulatory Competition and Regulatory Jurisdiction, 2000 J. Int'l Econ. L. 331 (Jun., 2000). (96) Howell E. Jackson, & Eric J. Pan, Regulatory Competition in International Securities Markets: Evidence from Europe in 1999 - Part I, 56 Bus. Law. 653 (2000-2001). (97) Andrew T. Guzman, International Regulatory Harmonization, Introduction to Symposium, 3 Chi. J. Int'l L. 271 (Fall, 2002). (98) Eddy Wymeersch, Company Law in Turmoil and the Way to Global Company Practice, 3 J. Corp. L. Stud. 283 (2003). (99) DOHA M. ABDELHAMID, INTERNATIONAL REGULATORY RIVALRY IN OPEN ECONOMIES: THE IMPACT OF DEREGULATION ON THE US AND UK FINANCIAL MARKETS (Ashgate Publishing, 2003). (100) Dale D. Murphy, The Business Dynamics of Global Regulatory Competition, in DYNAMICS OF REGULATORY CHANGE: How GLOBALIZATION AFFECTS NATIONAL REGULATORY CHANGE, 42 (University of California Press, 2004).

D. Federalism and Corporate Law

8 (1) Economic Federalism

(101) Frank R. Strong, Cooperative Federalism, 23 Iowa L. Rev. 459 (1938). (102) Henry M. Hart, The Relations Between State and Federal Law, 54 COLUM. L. REV. 489 (1954). (103) RICHARD MUSGRAVE, THEORY OF PUBLIC FINANCE: A STUDY IN PUBLIC ECONOMY (New York: McGraw, 1959) (104) Kingman Brewster, Jr., The Corporation and Economic Federalism, in THE CORPORATION IN MODERN SOCIETY, 72 (Edward s. Mason ed.) (Harvard University Press: 1960) (1959). (105) WALLACE E. OATES, FISCAL FEDERALISM (New York: Harcourt Brace Jovanovich,· 1972). (106) Susan Rose-Ackerman, "Does Federalism Matter?: Political Choice in a Federal Republic, 89 J. Pol. Econ. 152 (February 1981 ). (107) Richard A. Posner, Toward an Economic Theory of Federal Jurisdiction, 6 Harv. J. Law & Pub. Pol. 41 (1982). (108) Eli Noam, Government Regulation of Business in a Federal State: Allocation of Power under Deregulation, 20 Osgoode Hall L. J. 762 (1982). (109) Eli M. Noam, Government Regulation of Business in a Federal State: Allocation of Power under Deregulation, 20 Osgoode Hall L. J. 762 (1982). (110) Susan Rose-Ackerman, Cooperative Federalism and Co-optation, 92 Yale L. J. 1344 (1983). (111) DAVID N. KING, FISCAL TIERS: THE ECONOMICS OF MULTI-LEVEL GOVERNMENT (George Allen & Urwin, London: 1984) (112) Susan Rose-Ackerman & Jerry L. Mashaw, Federalism and Regulation, in THE REAGAN REGULATORY STRATEGY: AN ASSESSMENT, 111 (G. Eads and M. Fix, eds.) (Urban Institute Press, 1984) (113) Donald B. Rosenthal & James M. Hoefler, Competing Approaches to the Study of American Federalism and Intergovernmental Relations, 19 Publius J. Fed. 1 (Winter 1989) (114) Richard A. Epstein, Exit Rights under Federalism, 55 L. Contemp. Probs. 147 (Winter, 1992). (115) Daniel B. Rodriguez, Turning Federalism Inside Out: Intrastate Aspects of Interstate Regulatory Competition, 14 Yale L. & Pol'y Rev. 149 (1996). (116) Oliver Williamson, The Institutions and Governance of Economic Development and Reform, in THE MECHANISM OF GOVERNANCE (Oliver Williamson eds.) (New York: Oxford University Press, 1996). (117) Susan Rose-Ackerman & Jonathan Rodden, Does Federalism Preserve Markets?, 83 VAL. REV. 1521 (Oct., 1997).

9 (118) Yingyi Qian & Barry R. Weingast, Federalism as a Commitment to Preserving Market Incentives, 11 J. Econ. Persp. 83 (Autumn, 1997). (119) Richard Revesz, Federalism and Regulation: Some Generalizations, in REGULATORY COMPETITION AND ECONOMIC INTEGRATION: COMPARATIVE PERSPECTIVE, 3 (Daniel C. Esty & Damien Geradin eds.) (Oxford University Press; Feb., 2001).

(2) Impact of Federalism on Corporate Law

(120) David L. Ratner, Federal and State Roles in the Regulation of Insider Trading, 31 Bus. L. 947 (1975-76). See, for the discussion of this article 31 Bus. L. 965 - 73. (121) Richard M. Buxbaum, Federalism and Company Law, 82 Mich. L.Rev. 1163 (1984) (122) Richard M. Buxbaum, Federal Aspects of Corporate Law and Economic Theory, in CONTRACT AND ORGANISATION: LEGAL ANALYSIS IN THE LIGHT OF ECONOMIC AND SOCIAL THEORY 274 (T. Daintith & G. Teubner, eds., Berlin: 1986) (123) Ian M. Ramsay, Company Law and the Economics of Federalism, 19 Fed. L. Rev. 169 (1990). (124) William J. Carney, Federalism and Corporate Law: Conditions for Optimal Development (Sept. 22, 1994) (mimeo - unpublished manuscript, Emory University). (125) Donald C. Langevoort, Federalism in Corporate/Securities Law: Reflections on Delaware, California, and State Regulation of Insider Trading, 40 U.S.F. L. Rev. 879 (2005-2006).

(3) Federal - State Relations

(126) Gregg A. Jarrell & Michael Bradley, The Economic Effects of Federal and State Regulations of Cash Tender Offers, 23 J. L. & Econ. 371 (1980). (127) Richard A. Booth, The Emerging Conflict between Federal Securities Law and State Corporate Law, 12 J. Corp. L 73 (1986-1987). (128) Jonathan R. Macey, Federal Deference to Local Regulators and the Economic Theory ofRegulation, 7 5 VA. L. Rev. 265 ( 1991 ). (129) Richard C. Breeden, Giving It Away: Observations on the Role of the SEC in Corporate Governance and Corporate Charity, 41 N. Y. L. Sch. L. Rev. 1179 (1996- 1997). (130) Stephen Bottomley, The Birds, The Beasts, and the Bat: Developing a Constitutionalist Theory of Corporate Regulation, 27 Fed. L. Rev. 243 (1999). (131) Robert J. Brown, Jr., The Irrelevance of State Corporate Law in the Governance of Public Companies, 38 U. Rich. L. Rev. 317, 320-1 (2003-2004).

10 (4) State Jurisdiction over Foreign Corporations

(132) Note, Law ofForeign Corporations, 28 Am. Jurist & L. Mag. 271 (1842-1843). (133) Edward Quinton Keasbey, Jurisdiction over Foreign Corporations, 12 Harv. L. Rev. 1 (1898-1899). (134) Maxwell E. Pead, Jurisdiction over Foreign Corporations, 60 Am. L. Rev. 481 (1926) reprinted in 24 Mich. L. Rev. 633 (1925-1926). (135) Elcanon Isaacs, The Law ofForeign Corporations, 12 A.B.A. J. 707 (1926). (136) John P. Bullington, Jurisdiction over Foreign Corporations, 6 N.C. L. Rev. 147 (1927-1928) Edward S. Stimson, Jurisdiction over Foreign Corporations, 18 St. Louis L. Rev. 195 (1932-1933). (137) G. Hanse Voelkel, Comparative Study of the Laws of Latin America Governing Foreign Business Corporations, 14 Tul. L. Rev. 42 (1939-1940). (138) Robert A. Case, Conflict of Laws - Jurisdiction over Foreign Corporations, 25 N.D. B. Br. 111 (1949). (139) Comment, Foreign Corporations. State Boundaries for National Business, 59 YALE L. J. 737 (Mar., 1950).

(5) Internal Affairs Doctrine

(140) Joseph H. Beale, Jr., Corporations in Two States, 4 Colum. L. Rev. 391 (1904). (141) Harold M. Bowman, The State's Power over Foreign Corporations, 9 Mich. L. Rev. 549 (1911). (142) GERARD C. HENDERSON, THE POSITION OF FOREIGN CORPORATIONS IN AMERICAN CONSTITUTIONAL LAW (Harvard University Press: 1918). (143) Comment, Choice of Law in the Federal Courts: Use of State or Federal Law to Determine Foreign Corporation's Amenability to Suit, 1964 Duke L. J. 351 (Spring, 1964). (144) P. John Kozyris, Corporate Wars and Choice ofLaw, 1985 Duke L. J. 1 (Feb. 1985). (145) Deborah A. DeMott, Perspectives on Choice of Law for Corporate Internal Affairs, 48 Law & Contemp. Probs. 161 (Summer 1985). (146) Richard M. Buxbaum, The Threatened Constitutionalization of the Internal Affairs Doctrine in Corporation Law, 75 Cal. L. Rev. 29 (1987).

11 (147) Richard M. Buxbaum, The Origins of the American 'Internal Affairs' Rule in the Corporate Conflict of Laws, in FESTSCHRIFT FUR GERHARD KEGEL ZUM 75. GEBURTSTAG 29 (H.-J. Musielak & K. Schurig, eds., Stuttgart: 1987) (148) Richard M. Buxbaum, The Threatened Constitutionalization of the Internal Affairs Doctrine in Corporation Law, 75 Cal. L. Rev. 29 (Jan., 1987). (149) Paul N. Cox, The Constitutional "Dynamics" of the Internal Affairs Rule -- A Comment on CTS Corporation, 13 J. Corp. L. 317 (1988). (150) Jack L. Goldsmith III, Interest Analysis Applied to Corporations: The Unprincipled Use ofa Choice ofLaw Method, 98 Yale L.J. 597, 599 (1988). (151) Richard M. Buxbaum, Delaware Supreme Court Finds the State-of-Incorporation Version of the Internal Affairs Doctrine Embedded in the United States Constitution, 15 CEB Cal. Bus. L. Rep. 173 (1994) (152) Note, The Internal Affairs Doctrine: Theoretical Justifications and Tentative Explanations for Its Continued Primacy, 115 Harv. L. Rev. 1480 (Mar., 2002). (153) Kent Greenfield, Democracy and the Dominance of Delaware in Corporate Law, 67 Law & Contemp. Probs. 135 (2004). (154) Frederick Tung, Before Competition: Origins of the Internal Affairs Doctrine, 32 Iowa J. Corp. L. 33 (Fall, 2006). (155) Matt Stevens, Internal Affairs Doctrine: California versus Delaware in a Fight for the Right to Regulate Foreign Corporations (October 2006) available at (156) Frederic Tung, Explaining the Internal Affairs Doctrine, available at (157) Peer Zumbansen, Sustaining Paradox Boundaries: Perspectives on Internal Affairs in Domestic and International Law, 15 Eur. J. Int'l. L. 197 (2004) (reviewing A. Claire Cutler, PRIVATE POWER AND PUBLIC AUTHORITY: TRANSNATIONAL MERCHANT LAW IN THE GLOBAL POLITICAL ECONOMY (Cambridge University Press: 2003)).

(4) Corporate Choice of Law

(158) David A. Drexler, Delaware Courts and the New Jurisdiction Statute, 3 Del. J. Corp. L. 205 (1977-1978) (159) Arthur R. Pinto, The Internationalization of the Hostile Takeover Market: Its Implications for Choice of Law in Corporate and Securities Law, 16 BROOK. J. INT'L L. 55 (1990) (160) Larry E. Ribstein, Delaware, Lawyers, and Contractual Choice of Law, 19 Del. J. Corp. L. 999 (Summer, 1994).

12 (161) Bruce H. Kobayashi & Larry E. Ribstein, Contract and Jurisdictional Freedom, in THE FALL AND RISE OF FREEDOM OF CONTRACT, 325 (Francis H. Buckley ed.) (Duke University Press; 1999). (162) Michael Klausner, A Comment on Contract and Jurisdiction Competition, in THE FALL AND RISE OF FREEDOM OF CONTRACT, 349 (Francis H. Buckley ed.) (Duke University Press; 1999). (163) Geoffrey P. Miller, Choice ofLaw as a Recommitment Device, in THE FALL AND RISE OF FREEDOM OF CONTRACT, 357 (Francis H. Buckley ed.) (Duke University Press; 1999). (164) Erin A. O'Hara & Larry E. Ribstein, From Politics to Efficiency in Choice of Law, 67 U. Chi. L. Rev. 1151 (Fall, 2000). (165) METTE NEVILLE & KARSTEN ENGSIG S0RENSEN, THE INTERNATIONALISATION OF COMPANIES AND COMPANY LAWS (Copenhagen, 2001). (166) Horatia Muir Watt, Choice of Law in Integrated and Interconnected Markets: A Matter of Political Economy, 7 Elect. J. Comp. L. (Sept., 2003) available at . (167) Edward M. Iacobucci, Toward a Signaling Explanation of the Private Choice of Corporate Law, 6 Am. Law Econ. Rev. 319 (Fall 2004). (168) Jens C. Dammann, A New Approach to Corporate Choice of Law, 38 Vand. J. Transnat'l L 51 (2005). (169) Horst Eidenmtiller, Free Choice in International Corporate Law: European and German Corporate Law in European Competition between Corporate Law System, in AN ECONOMIC ANALYSIS OF PRIVATE INTERNATIONAL LA w, 187 (Jurgen Basedow & Toshiyuki Kono eds.) (Mohr Siebeck: 2006). (170) Tomoyo Matsui, What Cases Should be Governed by Lex Incorporationis? A Policy and Application-Costs Perspective, in AN ECONOMIC ANALYSIS OF PRIVATE INTERNATIONAL LA w, 207 (Jurgen Basedow & Toshiyuki Kono eds.) (Mohr Siebeck: 2006). (171) Y oshihisa Hayakawa, Japanese Regulations against Foreign Corporations and Global Competition in Corporate Law, in AN ECONOMIC ANALYSIS OF PRIVATE INTERNATIONAL LA w, 245 (Jurgen Basedow & Toshiyuki Kono eds.) (Mohr Siebeck: 2006).

(5) Multiple Incorporations

(172) Henry E. Foley, Incorporation, Multiple Incorporation, and the Conflict of Laws, 42 Harv. L. Rev. 516 (Feb., 1929). (173) H. L. H., Corporations: Incorporation in Several States as Affecting Jurisdiction of Federal Courts, 28 Mich. L. Rev. 436 (Feb., 1930).

13 (174) D. B. K., Domestication of Foreign Corporations and Jurisdiction of the Federal Courts Based on Diversity of Citizenship, 78 U. Penn. L. Rev. & Am. L. Reg. 538 (Feb., 1930). (175) Recent Cases, Federal Courts. Jurisdiction: Diversity of Citizenship. Domestication ofForeign Corporation, 43 Harv. L. Rev. 658 (Feb., 1930). (176) Comments, Multiple Incorporation as a Form ofRailroad Organization, 46 Yale L. J. 1370 (Jun., 1937). (177) Note, Compulsory Incorporation and the Power to Tax, 44 Harv. L. Rev. 1111 (May, 1931 ). (178) E. George Rudolph, Corporations: Foreign Corporations: Effect of Complying with Domestication Statute, 41 Mich. L. Rev. 977 (Apr., 1943). (179) Kenneth Liles, Foreign Corporations: What Constitutes "Doing Business"for Service of Process as Contrasted with Domestication Requirement, 45 Mich. L. Rev. 977 (Dec., 1946). (180) J. David Voss, Corporations: Effect of Domestication Statute on Foreign Corporations, 52 Mich. L. Rev. 448 (Jan., 1954). (181) A. J.E., The Legal Consequences of Failure to Comply with Domestication Statutes, 110 U. Penn. L. Rev. 241 (Dec., 1961).

(6) State Retaliatory Laws

(182) Wm. L. Murfree, Jr., Statutes Regulating Foreign Corporations - Retaliatory Laws, 36 Cent. L.J. 5 (1893). (183) W. D. Leeper, State Legislation Against Foreign Corporations, 41 Cent. L.J. 145 (1895). ' (184) Note, State Exclusion of Foreign Corporations from Local Business, 40 Yale L.J. 1103 (1930-1931).

(7) Pseudo-Foreign ("Tramp") Corporations

(185) Chapman W. Maupin, Partnership Liability of the Stockholders of Tramp Corporations, 47 Cent. L.J. 50 (1898). (186) C. B. Ames, Tramp Corporations, 48 Cent. L. J. 391 (1899). (187) Elvin R. Latty, Pseudo-Foreign Corporations, 65 Yale L. J. 137 (1955). (188) Samuel B. Stewart, New California Ruling Re Cumulative Voting in Foreign Corporations, 15 Bus. Law 70 (1959-1960).

14 (189) Note, Pseudo-Foreign Corporations and the Internal Affairs Rule, 1960 Duke L. J. 477 (1960). (190) Michael J. Halloran & Douglas L. Hammer, Section 2115 of the New California General Corporation Law - The Application of California Corporation Law to Foreign Corporations, 23 UCLA L. Rev. 1282 (1975-1976). (191) Douglas E. Noll, California's New General Corporation Law: Quasi-Foreign Corporations, 7 Pac. L. J. 673 (1976). (192) J. Thomas Oldham, California Regulates Pseudo-Foreign Corporations - Trampling upon the Tramp, 17 Santa Clara L. Rev. 85 ( 1977). (193) Mark E. Kruse, California's Statutory Attempt to Regulate Foreign Corporations: Will It Survive the Commerce Clause, 16 San Diego L. Rev. 943 (1978-1979). (194) Richard M. Buxbaum, The Application of California Corporation Law to Pseudo- Foreign Corporations, 4 CEB Calif. Bus. Law Rep. 109 (1983).

(8) State Franchise Taxes

(195) Robert J. Harding, Franchise Taxes of Corporations Having Stock without Par Value, 15 St. Louis L. Rev. 391 (1929-1930). (196) Comment, Suspension of Corporate Charter for Nonpayment of Franchise Tax, 48 Yale L. J. 650 (Feb., 1939). (197) Frank M. Keesling, California Franchise and Corporation Income Taxes, 8 Tax Executive 39 (1955-1956). (198) Richard W. Genetelli & David B. Zigman, Planning Strategies to Reduce State and Local Income/Franchise Taxes and Improve Profitability, 13 J. St. Tax'n 70 (1994- 1995).

E. Corporate Mobility

(1) State Legislation (Domestication, Reincorporation & Conversion)

(199) Alvin E. Evans, Service on Foreign Corporations after Withdrawal from the State, 42 Mich. L. Rev. 631 (1943-1944). (200) Scott FitzGibbon & Donald W. Glazer, Legal Opinions on Incorporation, Good Standing, and Qualification to Do Business, 41 Bus. Law. 461 (1986). (201) Michael Iovenko & Peter S. Smedresman, Transfer of Domicile and Domestication in Delaware, 3 Int'l Fin. L. Rev. 26 (1984).

15 (202) Charles Thelen Plambeck, Domestication of Foreign Corporations: Tax Planning in the Net of Internal Revenue Code Section 7701 (b), 11 N.C.J. Int'l L. & Com. Reg. 131 (1986). (203) Richard E. Andersen, Bringing It Onshore: Redomiciling Foreign Corporations through State Domestication Statutes, 14 Int'l Tax J. 91 (1988). (204) The Committee on Corporate Laws, Changes in the Model Business Corporation Act Relating to Domestication and Conversion - Final Adoption, 58 Bus. Law. 219 (2002-2003). (205) Kagan Kocaoglu (Cahn Kojaolu), State Legislation and Corporate Mobility, (May 22, 2007) (Unpublished section of JSD Dissertation, Georgetown University) (On file with the Library of Congress).

(2) Tax Consequences of a Corporate Forum Shift

(206) Charles C. MacLean, Jr., Problems of Reincorporation and Related Proposals of the Subchapter C Advisory Group, 13 Tax L. Rev. 407 (1957-1958). (207) George G. Grubb, Corporate Manipulations under Subchapter C: Reincorporation - Liquidation, 28 U. Cin. L. Rev. 304 (1959). (208) Note, Corporate Distributions: The Liquidation - Reincorporation Situation, 37 St. John's L. Rev. 329 (1962-1963). (209) Richard D. Kuhn, Liquidation and Reincorporation under the 1954 Code, 51 Geo. L. J. 96 (1962-1963 ). (210) Thomas C. Mayer, Ramifications of the Treasury's Liquidation - Reincorporation Doctrine, 25 U. Pitt. L. Rev. 637 (1963-1964). (211) Norman Herbert Lane, The Reincorporation Game: Have the Ground Rules Really Changed, 77 Harv. L. Rev. 1218 (1963-1964). (212) Frederic A. Nicholson, Recent Developments in the Reincorporation Area, 19 Tax L. Rev. 123 (1963-1964). (213) Note, Federal Taxation: Imposition of Double Standard for Section 368 Reorganization in Liquidation-Reincorporation Setting, 1966 Duke L. R. 1168 (1966). (214) R. P. Hertzog, The Reincorporation Problem in Subchapter C: A Question of Semantics, 9 Wm. & Mary L. Rev. 928 (1967-1968). (215) Elliot M. Surkin, Reincorporation Quandary Under Sections 368(a)(l)(D) and 354 (b)(l) Comments on Moffatt v. Commissioner, 53 Cornell L. Rev. 575 (1967-1968). (216) Bruce D. Lombardo & Thomas C. Riley, The Liquidation-Reincorporation Device - Analysis and Proposed Solutions, 14 Vill. L. Rev. 423 (1969).

16 (217) Richard D. Hobbet, Liquidation-Reincorporation: A Recent Development, 1971 Duke L. J. 367 (1971). (218) Andrew J. Levander, New Answers to the Liquidation-Reincorporation Problem, 76 Colum. L. Rev. 268 (1976). (219) Thomas A. Robinson, Tax Interpretation: Lessons from the Reincorporation Cases, 34 U. Fla. L. Rev. 1 (1981-1982). (220) I. Paul Mandelkern, Continuity of Business Enterprise and the Liquidation- Reincorporation Battle: Is Treasury Regulation 1.368-1 (d) a Trojan Horse, 34 U. Fla. L. Rev. 822 (1981-1982). (221) John R. Dorocak, Selling a Business and Starting Anew: Liquidation-Reincorporation in the Simple Situation, 2 Akron Tax J. 103 (1984). (222) Walter H. Nunnallee, The Liquidation-Reincorporation Doctrine Revisited after the Tax Reform Act of 1984: Do Sections 302 and 304 Provide the Solution, 40 Tax Law. 1 (1986-1987). (223) Matthew B. Krasner, Liquidation/Reincorporation after the Tax Reform Act of 1986, 24 Willamette L. Rev. 885 (1988). (224) Gero Burwitz, Tax Consequences of the Migration of Companies: A Practitioner's Perspective, 6 Eur. Bus. Org. L. Rev. 589 (2006).

(3) Off-Shore Tax Inversions

(225) Richard E. Andersen, Bringing It Onshore: Redomiciling Foreign Corporations through State Domestication Statutes, 14 Int'l Tax J. 91 (1988). (226) Eric T. Laity, The United States' Response to Tax Havens: The Foreign Base Company Services Income of Controlled Foreign Corporations, 18 Nw. J. Int'l L. & Bus. 1 (1997-1998). (227) Robert T. Kudrle & Lorraine Eden, The Campaign Against Tax Havens: Will It Last? Will It Work?, 9 Stan. J.L. Bus. & Fin. 37 (Fall, 2003). (228) Jeffrey K. Mackie-Mason & Roger H. Gordon, How Much Do Taxes Discourage Incorporation?, 52 J. Fin. 477 (1997).

(229) U.S. TREAS. OFF. TAX POL., CORPORATE INVERSION TRANSACTIONS: TAX POLICY IMPLICATIONS (May 17, 2002), available at (Last visited, Feb. 2, 2008). (230) Hale E. Sheppard, Fight or Flight of US-Based Multinational Businesses: Analyzing the Causes for, Effects of, and Solutions to the Corporate Inversion Trend, 23 NW. J. INT'L L. & BUS. 551 (Spring, 2003). (231) Beckett G. Cantley, Corporate Inversions: Will the Repo Act Keep Corporations From Moving to Bermuda?, 3 Hous. Bus. & Tax L.J. 1 (2003).

17 (232) Elizabeth Chorvat, You Can't Take It With You: Behavioral Finance and Corporate Expatriations, 37 U.C. Davis L. Rev. 453 (December, 2003). (233) Eric Tak Han, Is Capitalism Un-American? An Analysis of Corporate Inversions and Expatriation Proposals in Response, 27 Hastings Int'l & Comp. L. Rev. 511 (Spring, 2004). (234) Derek E. Anderson, Turning the Corporate Inversion Transaction Right Side Up: Proposed Legislation in The I 08th Congress Aims to Stamp Out Any Economic Vitality ofthe Corporate Inversion Transaction, 16 Fla. J. Int'l L. 267 (June, 2004). (235) John Kelly, Haven or Hell: Securities Exchange Listing Standards and Other Proposed Reforms as a Disincentive for Corporate Inversion Transactions, 14 Minn. J. Global Trade 199 (Winter, 2004). (236) Heather Campbell, When Good Tax Law Goes Bad: Stanley Works' Recent Dilemma and How the Internal Revenue Code Disadvantages US. Multinational Corporations Forcing Their Flight to Foreign Jurisdictions, 31 Syracuse J. Int'l L. & Com. 95 (Winter 2004). (237) Orsolya Kun, Corporate Inversions: The Interplay of Tax, Corporate, and Economic Implications, 29 Del. J. Corp. L. 313 (2004). (238) Dale D. Murphy, Off-Shore Finance, in THE STRUCTURE OF REGULATORY COMPETITION: CORPORATIONS AND PUBLIC POLICIES IN A GLOBAL ECONOMY 72 (Dale D. Murphy ed.) (Oxford University Press, 2004). (239) James J. Nash, The Bermuda Tax Triangle: A Proposal Allowing American Companies' Expatriation to Foreign Tax Havens, 27 Suffolk Transnat'l L. Rev. 271 (Summer, 2004). (240) John Kelly, Haven or Hell: Securities Exchange Listing Standards and Other Proposed Reforms as a Disincentive for Corporate Inversion Transactions, 14 Minn. J. Global Trade 199 (Winter, 2004). (241) James Mann, Corporate Inversions: A Symptom of a Larger Problem, the Corporate Income Tax, 78 S. Cal. L. Rev. 521 (2004-2005). (242) Steven V. Melnik, Corporate Expatriations - The Tip of the Iceberg: Restoring the Competitiveness of the United States in the Global Marketplace, 8 N.Y.U. J. Legis. & Pub. Pol'y 81 (2004 I 2005). (243) Michael S. Kirsch, The Congressional Response to Corporate Expatriations: The Tension Between Symbols and Substance in the Taxation of Multinational Corporations, 24 Va. Tax Rev. 475 (Winter, 2005). (244) WILLIAM BRITTAIN-CATLIN, OFFSHORE: THE DARK SIDE OF THE GLOBAL ECONOMY (Farrar, Straus and Giroux, 2005). (245) Note, Drawing Lines Around Corporate Inversion, 118 Harv. L. Rev. 2270 (May, 2005). (246) Eloine Kim, Corporate Inversion: Will the American Jobs Creation Act of 2004 Reduce the Incentive to Re-Incorporate?, 4 J. Int'l Bus. & L. 152 (Spring, 2005).

18 (247) Richard A. Johnson, Why Harmful Tax Practices Will Continue After Developing Nations Pay: A Critique of the OECD's Initiatives Against Harmful Tax Competition, 26 B.C. Third World L.J. 351 (Spring 2006).

(4) Cross - Listings

(248) Darius Miller, The Market Reaction to International Cross-Listings: Evidence from Depository Receipts, 51 J. Fin. Econ. 103 (1999). (249) John C. Coffee, Jr., Racing towards the Top: The Impact of Cross-Listing and Stock Market Competition on International Corporate Governance, 102 Colum. L. Rev. 1757 (2002). (250) John C. Coffee, Jr., The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 437 (Curtis J. Milhaupt eds., New York: 2003). (251) Alice de Jonge, Corporate Governance in a Cross-Border Environment: Overseas Listings of Chinese Firms, in Trends and Developments in Corporate Goverrnance, [Special Issue] Comp. L. Y. B. Int'l Bus. 81 (2003). (252) Larry E. Ribstein, Cross-Listing and Regulatory Competition, 1 Rev. L. & Econ. 97 (2005) (253) Cally Jordan, The Chameleon Effect: Beyond the Bonding Hypothesis for Cross- Listed Securities, 3 N.Y.U. J. L. & Bus. 37 (Fall, 2006). (254) Tobias H. Treger, Corporate Governance in a Viable Market for Secondary Listings, 10 J. Bus. & Emp. L. (2007).

(5) Entity Transformation Transactions

(255) Henry B. Hansmann, The Role ofNonprofit Enterprise, 89 Yale L.J. 835 (1980). (256) John D. Colombo, A Proposal for an Exit Tax on Nonprofit Conversion Transactions, 23 Iowa J. Corp. L. 779 (Summer, 1998). (257) Robert C. Art, Conversion and Merger of Disparate Business Entities, 76 Wash. L. Rev. 349, (2001). (258) Tamar Frankel, The Delaware Business Trust Act Failure as the New Corporate Law, 23 Cardozo L. Rev. 325 (2001). (259) Gregory M. Marks, Understanding and Selecting the Best Conversion or Merger Approach for Pass-through Entities, J. Pass. Ent. 29 (Oct., 2002)

19 (260) Henry Hansmann, Reiner Kraakman & Richard Squire, The New Business Entities in Evolutionary Perspective, 8 Eur. Bus. Org. L. Rev. (EBOR) 59 (Mar., 2007) (261) Michael P. Huff, The Alabama Business Entities Conversion and Merger Act: Issues Surrounding the Effect of Conversion, 56 Ala. L. Rev. 577 (Winter, 2004) (262) Henry Hansmann, Reiner Kraakman & Richard Squire, The New Business Entities in Evolutionary Perspective, 8 Eur. Bus. Org. L. Rev. (EBOR) 59 (Mar., 2007). (263) Garry W. Jenkins, Incorporation Choice, Uniformity, and the Reform of Nonprofit State Law, 41 Ga. L. Rev. 1113 (Summer, 2007).

(6) Entity Conversions in the Healthcare Sector

(264) Lawrence E. Singer, The Conversion Conundrum: The State and Federal Response to Hospitals' Changes in Charitable Status, 23 Am. J. L. and Med. 221 (1997) (265) William C. Kellough, Affiliations, Sales, and Conversions Involving Non-Profit and For-Profit Healthcare Organizations in Oklahoma, 33 Tulsa L.J. 521 (Winter, 1997). (266) David A. Hyman, Hospital Conversions: Fact, Fantasy, and Regulatory Follies, 23 Iowa J. Corp. L. 741 (Summer, 1998). (267) Patrick K. Moore, Gary S. Mendoza , John P. Krave , James R. Schwartz, Legal Issues in Selling and Converting Non-Profit Health Care Organizations, 20 Whittier L. Rev. 351 (Winter, 1998). (268) James J. Fishman, Checkpoints on the Conversion Highway: Some Trouble Spots in the Conversion ofNonprofit Health Care Organizations to For-Profit Status, 23 Iowa J. Corp. L. 701, 719 (Summer, 1998). (269) John D. Colombo, A Proposal for an Exit Tax on Nonprofit Conversion Transactions, 23 Iowa J. Corp. L. 779, 779-81 (Summer, 1998) (270) Kevin F. Donohue, Crossroads in Hospital Conversions - A Survey of Nonprofit Hospital Conversion Legislation, 8 Ann. Health L. 39 (1999). (271) Phill Kline & Reid F. Holbrook, Protecting Charitable Assets in Hospital Conversions: An Important Role for the Attorney General, 13 Kan. J.L. & Pub. Pol'y 351 (Spring, 2004).

(7) War Time Domicile Changes

(272) Note, Corporations in Exile, 43 Colum. L. Rev. 364 (Apr., 1943).

20 (8) Shareholder Access to Forum Selection and Federal Reinforcement

(273) John C. Coffee, Jr., The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards, 8 Cardozo L. Rev. 759 (1987). (274) William W. Bratton & Joseph A. McCahery, Regulatory Competition, Regulatory Capture, and Corporate Self- Regulation, 73 N.C. L. Rev. 1861 (1995). (275) David E. Wildasin & John D. Wilson, Imperfect Mobility and Local Government Behavior in an Overlapping Generations Model, 60 J. Pub. Econ. 177 (1996). (276) Stephen J. Choi & Andrew T. Guzman, Choice and Federal Intervention in Corporate Law, 87 Va. L. Rev. 961 (Sept., 2001) (277) Lucian Arye Bebchuk & Allen Ferrell, A New Approach to Takeover Law and Regulatory Competition, 87 Va. L. Rev. 111 (2001). (278) Lucian Arye Bebchuk & Assaf Hamdani, Vigorous Race or Leisurely Walk: Reconsidering the Competition over Corporate Charters, 112 Yale L.J. 553 (2002). (279) Jens Dammann, A New Approach to Corporate Choice ofLaw, 38 Vand. J. Transnat'l L. 51 (2005). (280) Jennifer G. Hill, The Shifting Balance of Power between Shareholders and the Board: News Carp's Exodus to Delaware and Other Antipodean Tales, (January 2008) (Sydney Law School Research Paper No. 08/20) available at .

(9) Position for an Exit

(281) Kagan Kocaoglu, State Legislation and Corporate Mobility, (May 22, 2007) (Unpublished section of JSD Dissertation, Georgetown University) (On file with the Library of Congress).

F. Regulatory Motion

(1) Regulatory Pendulum

(282) KARL POLANYI, THE GREAT TRANSFORMATION: THE POLITICAL AND ECONOMIC ORIGINS OF OUR TIME (Beacon Press; 2001) (1941). (283) George Stigler, The Theory ofEconomic Regulation, 2 Bell J. Econ. 3 (1971).

21 (284) Sam Peltzman, Toward a More General Theory of Regulation, 19 J. L. & Econ. 211 (1976). (285) William F. Shughart, II & Robert D. Tollison, The Cyclical Character of Regulatory Activity, 45 Pub. Cho. 393 (Mar., 1985). (286) Peter J. Henning, Corporate Law after the Eighties: Reflections on the Relationship between Management, Shareholders, and Stakeholders, 36 St. Louis U. L.J. 519 (1991-1992). (287) Ragnar E. Lofstedt, The Swing of the Regulatory Pendulum in Europe: From Precautionary Principle to (Regulatory) Impact Analysis, 28 J. Risk & Uncertainty 237 (May 2004).

(2) Impact of Crises on Regulation

(288) Joseph A. Grundfest, Lobbying into Limbo: The Political Ecology of the Savings and Loan Crisis (Savings & Loan Crisis: Lessons and a Look Ahead), 2 Stan. L. & Pol. Rev. 25 (Spr 1990). (289) John C. Coffee, Jr., The Rise ofDispersed Ownership: The Roles ofLaw and the State in the Separation of Ownership and Control, 111 Yale L.J. 1, 66 (Oct., 2001). (290) Robert W. Hamilton, The Crisis in Corporate Governance: 2002 Style, 40 Hous. L. Rev. 1 (2003-2004). (291) Stefan Grundmann, The Structure of European Company Law: From Crisis to Boom, 5 Eur. Bus. Org. L. Rev. (EBOR) 601 (Dec., 2004). (292) Gerald Spindler, Scandals, Regulation, and Supervisory Agencies: The European Perspective, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE us, 105 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005).

(3) Indeterminacy and Legal Complexity

(293) Douglas M. Branson, Indeterminacy: The Final Ingredient in an Interest Group Analysis of Corporate Law, 43 Vand. L. Rev. 85 (Jan., 1990). (294) Michelle J. White, Legal Complexity and Lawyers' Benefit from Litigation, 12 Int. Rev. L. & Econ. 381 (1992). (295) William T. Allen, Ambiguity in Corporation Law, 22 Del. J. Corp. L. 894 (1997). (296) Ehud Kamar, A Regulatory Competition Theory of Indeterminacy in Corporate Law, 98 Colum. L. Rev. 1908 (1998).

22 (297) Ehud Kamar, Shareholder Litigation Under Indeterminate Corporate Law, 66 U. Chi. L. Rev. 887 (1999). (298) Mark J. Roe, The Inevitable Instability of American Corporate Governance, in RESTORING TRUST IN AMERICAN BUSINESS (Jay w. Lorsch, Leslie Berlowitz, and Andy Zelleke eds.) (Cambridge, Mass.: American Academy of Arts and Sciences : MIT Press, 2005). (299) Sean J. Griffith & Myron T. Steele, On Corporate Law Federalism: Threatening the Thaumatrope, 61 Bus. Law. 1 (Nov., 2005). (300) Helmut Wagner, Economic Analysis of Cross-Border Legal Uncertainty; The Example of the European Union, in THE NEED FOR A EUROPEAN CONTRACT LAW: EMPIRICAL AND LEGAL PERSPECTIVES, 27 (J. M. Smits ed.) (Europa Publishing; 2005).

(4) Legal Transplants

(301) Katharina Pistor, The Standardization of Law and Its Effects on Developing Economies, 50 Am. J. Comp. L. 97 (2002). (302) Lynn A. Stout, On the Export of US-Style Corporate Fiduciary Duties to Other Cultures: Can A Transplant Take?, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 46 (Curtis Milhaupt, ed.) (Columbia University Press, 2003). (303) Troy A. Paredes, A Systems Approach to Corporate Governance Reform: Why Importing US. Corporate Law isn't the Answer, 45 Wm and Mary L. Rev. 1055 (2004). (304) Brian Chef:fins, Corporate Governance Reform: Britain as an Exporter, in CORPORATE GOVERNANCE: CRITICAL PERSPECTIVES ON BUSINESS AND MANAGEMENT, VOL. I (Thomas Clarke ed.) (London: Routledge, 2004). (305) Curtis J. Milhaupt, Historical Pathways of Reform: Foreign Law Transplants and Japanese Corporate Governance, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 53 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (306) Peer Zumbansen & Patrick Rundans, The Political Economy of Legal Transplants in Corporate Governance, in CORPORATE GOVERNANCE IN THE v ARIETIES OF CAPITALISM: LEGAL REFORM IN THE CONTEMPORARY POLITICAL ECONOMY (Peer Zumbansen & John Cioffi eds., forthcoming 2006).

G. Regulatory Competition in Non-Corporate Forums

23 (1) Antitrust Competition

(307) Frank H. Easterbrook, Antitrust and the Economics of Federalism, 26 J. L. & Econ. 23 (1983).

(2) Bankruptcy Competition

(308) Barry E. Adler & Henry N. Butler, On the "Delawarization of Bankruptcy" Debate, 52 Emory L.J. 1309 (Summer, 2003).

(3) Competition for Trust Funds

(309) Robert H. Sitkoff & Max Schanzenbach. Jurisdictional Competition for Trust Funds: An Empirical Analysis ofPerpetuities and Taxes, 115 Yale Law Journal 356 (2005).

(4) Regulatory Competition in Transnational Finance

(310) James D. Cox, Rethinking US. Securities Laws in the Shadow of International Regulatory Competition, 55 Law & Contemp. Prob. 157 (1992). (311) Gerard Hertig, Imperfect Mutual Recognition for EU Financial Services, 14 lnt'l Rev. L. & Econ. 177 (1994). (312) J. William Hicks, Protection of Individual Investors under US. Securities Laws: The Impact of International Regulatory Competition, 1 Ind. J. Global Legal Stud. 431 (1993-1994). (313) James D. Cox, Choice of Law Rules for International Securities Transactions?, 66 U. Cincinnati L.Rev. 1179 (1998). (314) Stephen J. Choi & Andrew T. Guzman, The Dangerous Extraterritoriality of American Securities Law, 17 Nw. J. Int'l L. & Bus. 207 (1996). (315) Stephen J. Choi & Andrew T. Guzman, National Laws, International Money: Regulation in a Global Capital Market, 65 Ford. L. Rev. 1855 (1997). (316) Sol Picciotto & Jason Haines, Regulating Global Financial Markets, 26 J. L. & Soc. 351 (1999). (317) Stephen J. Choi, The Unfounded Fear of Regulation S: Empirical Evidence on Offshore Securities Offerings, 50 Duke L. J. 663 (2000). (318) Stephen J. Choi, Regulating Investors Not Issuers: A Market-Based Proposal, 88 Cal. L. Rev. 280 (March, 2000). 24 (319) Stephen J. Choi, Promoting Issuer Choice in Securities Regulation, 41 Va. J. Int'l L. 815 (2001). (320) Stephen J. Choi,Assessing Regulatory Responses to Globalizing Securities Markets, 2 Theo. Inq. L. 613 (2001). (321) John C. Coffee Jr., Competition Among Securities Markets: A Path Dependent Perspective (Columbia Law Sch. Ctr. for Law & Econ. Studies, Working Paper No. 192, 2001), at (322) John C. Coffee, Jr., Racing Towards the Top? The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance, 102 Colum. L. Rev. 1757 (2002). (323) Stephen J. Choi, Channeling Global Securities Market Competition, 16 Transnat'l Law. 111 (2003). (324) John C. Coffee, Jr., The Impact of Cross-Listings and Stock Market Competition on International Corporate Governance, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 437 (Curtis J. Milhaupt eds., New York: 2003).

II. CHARTER MARKET COMPETITION

A. Products in the Charter Market

(1) Delaware Corporate Law

(325) [DELAWARE] CORPORATION TRUST Co., BUSINESS CORPORATIONS UNDER THE LAWS OF DELA WARE (1907) [in brackets added by the author]. (326) S. Samuel Arsht & Walter K. Stapleton, Delaware's New General Corporation Law: Substantive Changes, 23 Bus. L. 75 (1967). (327) S. Samuel Arsht, How and Why of Incorporation in Delaware, 3 Del. J. Corp. L. 163 (1977-1978). (328) DELAWARE, LEWIS S. BLACK, JR., WHY CORPORATIONS CHOOSE DELAWARE (Corporation Service Company, January 1999) (1993).

(2) Model Business Corporation Act

(329) George D. Gibson, Virginia's Experience with the Model Business Corporation Act, 13 Bus. Law. 706 (1957-1958).

25 (330) Melvin Aron Eisenberg, The Model Business Corporation Act and the Model Business Corporation Act Annotated, 29 Bus. L. 1407 (1974). (331) Michael P. Dooley & Michael D. Goldman, Some Comparisons between the Model Business Corporation Act and the Delaware General Corporation Law, 56 Bus. Law. 737 (2000-2001).

(3) Non-Delaware State Corporate Laws

(332) John H. Shields, Why do Wisconsin Concerns Incorporate in Other States?, 11 WIS. L. REV. 457 (1936). (333) Tom Downs, Michigan to have a New Corporation Code?, 18 Wayne L. Rev. 913 (1972). (334) Cyril Moscow, Michigan or Delaware Incorporation, 42 Wayne L. Rev. 1897 (1995- 1996). (335) David Mace Roberts & David Mace Pivnick,, Table of the Corporate Tape: Delaware, Nevada and Texas, 52 Baylor L. Rev. 45 (2000). (336) James I. Lotstein & Christopher Calio, Why Choose Connecticut? Advantages of the Connecticut Business Corporation Act Over the Delaware General Corporation Law, 10 Conn. Law. (Apr. 2000). (337) Byron F. Egan & Curtis W. Huff, Choice of State of Incorporation - Texas versus Delaware: Is It Now Time to Rethink Traditional Notions, 54 S.M.U. L. Rev. 249 (2001).

(4) European Products

(338) John Lowry, Eliminating Obstacles to Freedom of Establishment: The Competitive Edge of UK Company Law, 63 Cambridge L. J. 331 (2004).

B. Historical Development of the Corporate Charter Market

(1) Historical Progress

(339) Samuel Williston, A History of the Law of Business Organizations before 1800, 2 Harv. L. Rev. 105 (1888).

26 (340) Joseph S. Davis, Corporations in the American Colonies, in ESSAYS IN THE EARLIER HISTORY OF AMERICAN CORPORATIONS, VOL. I, at 3 (Josephs. Davis ed.) (Harv. Uni. Press: 1917).1 (341) Joseph S. Davis, Eighteenth Century Business Corporations in the United States, in ESSAYS IN THE EARLIER HISTORY OF AMERICAN CORPORATIONS, VOL. II, at 3 (Joseph S. Davis ed.) (Lawbook Exchange: 2006) ( 1917). (342) Harold W. Stoke, Economic Influences Upon the Corporation Laws of New Jersey, 30 J. Pol. Econ. 551 (1930). (343) Note, Compulsory Incorporation and the Power to Tax, 44 Harv. L. Rev. 1111 (May, 1931). (344) G. Harrington, The Legislative History of the Delaware General Incorporation Act of 1899 to 1933 (1933) (unpublished masters' thesis, Harvard Law School) (on file with the Law School Library, Harvard University). (345) JOSEPH G. BLAND!, MARYLAND BUSINESS CORPORATIONS 1783-1852 (Johns Hopkins University Press, 1934). (346) Vincent W. Westrup, A Comparative Study of the Corporation Laws of the States of New Jersey, Delaware, Maryland and New York, 11 N.Y.U.L.Q. Rev. 349 (1934). (347) E. Merrick Dodd, Jr., Statutory Developments in Business Corporation Law, 1886- 1936 50 Harv. L. Rev. 27 (1936) (348) James L. Wolcott, The Development of the Delaware Corporation Law (1937) (Harvard GSB Graduate Thesis) (on file with the Law School Library, Harvard University) (349) George D. Hornstein, Rights of Stockholders in the New York Courts, 56 Yale L. J. 942 (Jun., 1947). (350) GEORGE HEBERTON EVANS, JR. BUSINESS INCORPORATIONS IN THE UNITED STATES, 1800-1943 (Nat'l Bureau of Econ. Research, Inc., New York: 1948). (351) JOHN W. CADMAN, JR., THE CORPORATION IN NEW JERSEY: BUSINESS AND POLITICS, 1781-1875 (Harvard University Press, 1949). (352) Kenneth K. Luce, Trends in Modern Corporation Legislation, 50 Mich. L. Rev. 1291 (1951-1952). (353) Ray Garrett, History, Purpose and Summary of the Model Business Corporation Act, 6 Bus. Law. [vii] (1950-1951) (354) EDWIN MERRICK DODD, AMERICAN BUSINESS CORPORATIONS UNTIL 1860 (Harvard University Press, 1954). (355) Wilber G. Katz, The Philosophy of Midcentury Corporation Statutes, 23 L. & Contemp. Probs. 177 (Spring, 1958)

1 cf. Simeon E. Baldwin, Review, 23 Am. Hist. Rev. 185, 186 (Oct. 1977) (reviewing JOSEPH STANCLIFFE DAVIS, ESSAYS IN THE EARLIER HISTORY OF AMERICAN CORPORATIONS (1917).

27 (356) Paul P. Harbrecht & Joseph A. McCallin, The Corporation and the State in Anglo- American Law and Politics, 10 J. Pub. L. 1 (1961) (357) Richard F.Corroon, The Proposed New Delaware Corporation Statute, 20 J. Legal Educ. 522 ( 1967-1968). (358) Hugh L. Sowards & James S. Mofsky, Factors Affecting the Development of Corporation Law, 23 U. Miami L. Rev. 476 (1969). (359) JAMES WILLARD HURST, THE LEGITIMACY OF THE BUSINESS CORPORATION IN THE LA w OF THE UNITED STA TES, 1780-1970 (University Press of Virginia, Charlottesville: 1970). (360) S. Samuel Arsht, A History of Delaware Corporation Law, 1 Del. J. Corp. L. 1 (1976). (361) Joel Seligman, A Brief History of Delaware's General Corporation Law of 1899, 1 Del. J. Corp. L. 249 (1976). (362) Walter Werner, Corporation Law in Search of its Future, 81 Colum. L. Rev. 1611 (Dec., 1981 ). (363) Edmund Kitch, Regulation and the American Common Market, in REGULATION FEDERALISM, AND INTERSTATE COMMERCE 9 (A. Dan Tarlock ed., Cambridge, Mass.; Oelgeschlager, Gunn & Hain, 1981 ). (364) Melvin I. Urofsky, Proposed Federal Incorporation in the Progressive Era, 26 Am. J. L. Hist. 160 (Apr., 1982). (365) Henry N. Butler, Nineteenth-Century Jurisdictional Competition in the Granting of Corporate Privileges, 14 J. Legal Stud. 129 (Jan., 1985). (366) Robert D. Tollison & William F. Shughart, II, Corporate Chartering: An Exploration in the Economics ofLegal Change, 23 Econ. Inq. 585 (Oct. 1985). (367) Henry N. Butler, General Incorporation in Nineteenth Century England: Interaction ofCommon Law and Legislative Processes, 6 Int'l Rev. L. & Econ. 169 (1986). (368) David S. Schaffer, Jr., Delaware's Limit on Director Liability: How the Market for Incorporation Shapes Corporate Law, 10 Harv. J. L. & Pub. Pol'y 665 (1987). (369) Christopher Grandy, New Jersey Corporate Chartermongering, 1875-1929, 49 J. Econ. Hist. 677 (1989). (370) Christopher Grandy, Tum of the Century Chartermongering: Evidence from New Jersey, Delaware, New York, and Rhode Island (Working Paper 1988). (371) Curtis Alva, Delaware and the Market for Corporate Charters: History and Agency, 15 Del. J. Corp. L. 885 (1990). (372) CHRISTOPHER GRANDY, NEW JERSEY AND THE FISCAL ORIGINS OF MODERN AMERICAN CORPORATION LAW, (Garland Publishing, New York: 1993). (373) Gary D. Libecap, Book Review, 53 J. Econ. Hist. 962 (Dec., 1993) (reviewing CHRISTOPHER GRANDY, NEW JERSEY AND THE FISCAL ORIGINS OF MODERN AMERICAN CORPORATION LAW, (Garland Publishing, New York: 1993)).

28 (374) Stephen J. Choi, Investor Liability: Financial Innovations in the Regulatory State and the Coming Revolution in Corporate Law, 107 Harv. L. Rev. 1941 (1994). (375) Gregory A. Mark, The Court and the Corporation: Jurisprudence, Localism, and Federalism, 1997 Sup. Ct. Rev. 403 (1997). (376) Robert W. Hamilton, Corporate Governance in America 1950-2000: Major Changes but Uncertain Benefits, 25 J. Corp. L. 349 (1999-2000). (377) Richard A. Booth, A Chronology of the Evolution of the MBCA, 56 Bus. Law. 63 (2000). (378) Christopher J. Cyphers, Testing the Limits of Federalism, in THE NATIONAL CIVIC FEDERATION AND THE MAKING OF A NEW LIBERALISM, 1900-1915, at 153 (Christopher J. Cyphers ed.) (2002). (379) Yuwa Wei, The History of the Corporation in China, 6 Uni. West. Syd. L. Rev. (UWSLR) 95 (2002). (380) Yuwa Wei, The Historical Development of the Corporation and Corporate Law in China, 14 Aust. J. Corp. L. 240 (2002). (381) Gregory A. Mark, The Legal History of Corporate Scandal: Some Observations on the Ancestry and Significance ofthe Enron Era, 35 Conn. L. Rev. 1073 (2002-2003). (382) John Joseph Wallis, Market Augmenting Government? The State and the Corporation in 19th Century America, in MARKET-AUGMENTING GOVERNMENT: THE INSTITUTIONAL FOUNDATIONS FOR PROSPERITY, (Omer Azfar & Charles A. Cadwell eds.) (2003). (383) Naomi R. Lamoreaux, Partnerships, Corporations, and the Limits on Contractual Freedom in US. History: An Essay in Economics, Law, and Culture, in CONSTRUCTING CORPORATE AMERICA: HISTORY, POLITICS, AND CULTURE 29 (Kenneth Lipartito & David B. Sicilia eds.) (New York: Oxford University Press, 2004). (384) Harald· Baum, Change of Governance in Historic Perspective: The German Experience, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 3 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (385) Timur Kuran, The Absence of the Corporation in Islamic Law: Origins and Persistence, 53 Am. J. Comp. L. 785 (2005). (386) John J. Wallis, Constitutions, Corporations, and Corruption: American States and Constitutional Change, 1842 to 1852, 65 J. Econ. Hist. 211 (2005). (387) J. J. Chausovsky, The Corporation Question in the States, 1865-1900: Debates in the Constitutional Conventions (Apr. 2005) (paper presented at the annual meeting of the Midwest Political Science Association, Palmer House Hilton, Chicago, Illinois) (on file with the allacademic.com). (388) John Joseph Wallis, Constitutions, Corporations, and Corruption: American States and Constitutional Change, 1842 to 1852, 65 J. Econ. Hist. 211 (2005).

29 (389) Harald Baum, Change of Governance in Historic Perspective: The German Experience, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 3 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (390) Rob McQueen, Company Law as Imperialism, 5 Aust. J. Comp. L. 8 (May 1995). (391) E. Norman Veasey & Christine T. Di Guglielmo, What Happened in Delaware Corporate Law and Governance From 1992-2004? A Retrospective on Some Key Developments, 153 U. Pa. L. Rev. 1399 (May, 2005). (392) Lucian Arye Bebchuk & Assaf Hamdani, Federal Corporate Law: Lessons from History, 106 Colum. L. Rev. 1793 (2006). (393) Jonathan Chausovsky, State Regulation of Corporations in the Late Nineteenth Century: A Critique of the New Jersey Thesis, 21 Stud. Am. Pol. Dev. 30 (Spring 2007). (394) Charles M. Yablon, The Historical Race Competition for Corporate Charters and the Rise and Decline ofNew Jersey: 1880-1910, 32 Iowa J. Corp. L. 323 (Winter, 2007).

(2) Retrospective Perspectives

(395) B. J. Ramage, Growth and Moral Attitude of Corporations, 49 Am. L. Reg. 221 (1901). (396) Charles F. Bostwick & Charles W. Coleman, Where to Incorporate, 3 (The) Brief 162 (1901). (397) Roberta Romano, After the Revolution in Corporate Law, 55 J. Leg. Ed. 342 (2005).

(3) Path Dependency

(398) Lucian Arye Bebchuk & Mark J. Roe, A Theory of Path Dependence in Corporate Ownership and Governance, 52 Stan. L. Rev. 127 (November, 1999).

C. Doctrinal Foundations

(1) Government Discipline School (Race to the Bottom)

(399) Note, Little Delaware Makes a Bid for the Organization of Trusts, 33 Am. L. Rev. 418 (1899).

30 (400) Special, Secretaries of States as Corporation Hunters.; James B. Dill Tells Pennsylvania Lawyers of Rivalry for Corporate Supremacy -- New York's Unfavorable Position, N.Y. TIMES, June 30, 1903, at 6. (401) William E. Church, The "Tramp" Corporation, 64 Alb. L. J. 275 (1903). (402) Lincoln Steffens, New Jersey: A Traitor State, Pt. 11, 25 McClure's Mag. 41 (1905). (403) Raymond T. Zillmer, State Laws: Survival of the Unfit, 62 U. Pa. L. Rev. 509 (1913- 1914). (404) Adolph A. Berle, Jr., Investors and the Revised Delaware Corporation Act, 29 Colum. L. Rev. 563 (1929). (405) Louis K. Liggett Co. v. Lee,, 288 U.S. 517 (1933). (406) Hemy W. Ballantine, Major Changes in California Corporate Law, 6 Cal. St. B.J. 159 (1931). (407) E. Merrick Dodd, Jr., Statutory Developments in Business Corporation Law, 1886- 1936, 50 Harv. L. Rev. 27 (1936). (408) Wiley B. Rutledge, Jr., Significant Trends in Modern Incorporation Statutes, 22 Wash. U. L. Q. 305 (1937). (409) Benjamin Harris, Jr., The Model Business Corporation Act - Invitation to Irresponsibility?, 50 Nw. U. L. Rev. 1 (1955)). (410) Elvin R. Latty, Why are Business Corporation Laws Largely "Enabling"?, 50 Cornell L. Q. 599 (1965). (411) Harry M. First, Law for Sale: A Study of the Delaware Corporation Law of 1967, 117 U. Pa. L. Rev. 861 (Apr., 1969). (412) William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 Yale L.J. 663 (1973-1974). (413) William L. Cary, Summary of Article on Federalism and Corporate Law, 31 Bus. Law. 1105 (1975-1976). (414) Ernest L. Folk, III, State Statutes: Their Role in Prescribing Norms of Responsible Management Conduct, 31 Bus. Law. 1031 (1975-1976). See, for the discussion of this article 31 Bus. L. 1081 - 91. (415) Charles W. Murdock, Delaware: The Race to the Bottom - Is an End in Sight?, 9 Loy. U. Chi. L.J. 643 (1978). (416) Melvin Aron Eisenberg, The Modernization of Corporate Law: An Essay for Bill Cary, 37 U. Miami L. Rev. 187 (1983). (417) John C. Coffee, Jr., The Future of Corporate Federalism: State Competition and the New Trend Toward De Facto Federal Minimum Standards, 8 Cardozo L. Rev. 759 (1987). ( 418) John C. Coffee Jr., No Exit: Opting Out, the Contractual Theory of the Corporation and the Special Case of Remedies, 53 Brook. L. Rev. 919 (1987-1988).

31 (419) Diane L. Saltoun, Fortifying the Directorial Stronghold: Delaware Limits Director Liability, 29 B. C. L. Rev. 481 (1987-1988). (420) Melvin Aron Eisenberg, The Structure of Corporation Law, 89 Colum. L. Rev. 1461 (Nov., 1989). (421) Melvin Aron Eisenberg, Bad Arguments in Corporate Law, 78 Geo. L. J. 1551 (1989- 1990). (422) John C. Coffee, Jr., Comment in "The Most-Cited Articles from the Yale Law Journal", (Fred R. Shapiro eds.) 100 Yale L.J. 1449 (1991). (423) Lucian Arye Bebchuk, Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law, 105 Harv. L. Rev. 1435 (1992). (424) Jason M. Quintana, Going Private Transactions: Delaware's Race to the Bottom, 2004 Colum. Bus. L. Rev. 547 (2004). (425) LYNN M. LOPUCKI, COURTING FAILURE: How COMPETITION FOR BIG CASES Is CORRUPTING THE BANKRUPTCY COURTS (The University of Michigan Press, 2005). (426) Gary M. Brown, Changing Models in Corporate Governance - Implications of the us Sarbanes - Oxley Act, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 143 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (427) Martin F. Hellwig, Market Discipline, Information Processing, and Corporate Governance, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 379 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (428) Stephen P. Ferris, Robert M. Lawless, & Gregory Noronha, The Influence of State Legal Environments on Firm Incorporation Decisions and Values, 2 J. L. Econ. & Pol. 1 (2006).

(2) Anti-Business Sentiment

(429) Speed Mosby, The Corporation System - An Argument for Its Abolition, 34 Arn. L. Rev. 544 (1900). (430) RALPH NADER, MARK GREEN & JOEL SELIGMAN., TAMING THE GIANT CORPORATION: T AMINO THE GIANT CORPORATION: How THE LARGEST CORPORATIONS CONTROL OUR LIVES (W. W. Norton & Company, Inc.; 1976). (431) Richard L. Grossman and Frank T. Adams, Taking Care of Business: Citizenship and the Charter ofIncorporation, Earth Island J. 34 (Spring 1993).

(3) Bankruptcy Reform

32 (432) Lynn M. LoPucki & Sara D. Kalin, The Failure of Public Company Bankruptcies in Delaware and New York: Empirical Evidence of a "Race to the Bottom," 54 Vand. L. Rev. 231 (2001). (433) LYNN M. LOPUCKI, COURTING FAILURE: How COMPETITION FOR BIG CASES Is CORRUPTING THE BANKRUPTCY COURTS (The University of Michigan Press, 2005).

(4) Market Discipline School (Race to the Top)

(434) Ralph K. Winter, Jr., Economic Regulation vs. Competition: Ralph Nader and Creeping Capitalism, 82 Yale L. J. 890 (1972-1973). (435) S. Samuel Arsht, Reply to Professor Cary, 31 Bus. L. 1113 (1976). ( 436) Ralph K. Winter, Jr., State Law, Shareholder Protection, and the Theory of the Corporation, 6 J. Legal Stud. 251 (1977). (437) Daniel R. Fischel, The "Race to the Bottom" Revisited: Reflections on Recent Developments in Delaware's Corporation Law, 76 Nw. U. L. Rev. 913 (1982) (438) RALPH K. WINTER, GOVERNMENT AND THE CORPORATION (Washington, D.C., AEI Press, 1978) (439) Ralph K. Winter, Jr., Private Goals and Competition among State Legal Systems, 6 Harv. J. L. & Pub. Pol'y 127 (1982-1983). (440) Ralph K. Winter, Jr., Private Goals and Competition among State Legal Systems, 6 Harv. J. L. & Pub. Pol'y 127 (1982-1983). (441) Ralph K. Winter, Jr., The Development of the Law of Corporate Governance, 9 Del. J. Corp. L. 524 (1984). (442) Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. Econ. & Org. 225 (Autumn, 1985). (443) Roberta Romano, The State Competition Debate in Corporate Law, 8 Cardozo L. Rev. 709 (1987). (444) Ralph K. Winter, Jr., On Protecting the Ordinary Investor, 63 Wash. L. Rev. 881 (1998). ( 445) Roberta Romano, Answering the Wrong Question: The Tenuous Case for Mandatory Corporate Laws, 89 Colum. L. Rev. 1599 (Nov., 1989). (446) ROBERTA ROMANO, THE GENIUS OF AMERICAN CORPORATE LAW (AEI Press, 1993). (447) David A. Drexler, The Growth of Corporate Law, in THE DELAWARE BAR IN THE TWENTIETH CENTURY 583 (Helen L. Winslow, Anne E. Bookout & Patricia C. Hannigan eds., 1994). (448) FRANK H. EASTERBROOK & DANIEL R. FISCHEL, THE ECONOMIC STRUCTURE OF CORPORATE LAW (2nd ed. 1996).

33 ( 449) Alvin K. Klevorick, Reflections on the Race to the Bottom, in FAIR TRADE AND HARMONIZATION, VOL. 1: ECONOMIC ANALYSIS (J. N. Bhagwati & R. E. Hudec eds.) (1996) ( 450) Roberta Romano, Corporate Law and Corporate Governance, 5 Ind. & Corp. Chg. 277 (1996). (451) Roberta Romano, Explaining American Exceptionalism in Corporate Law, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 127 (J. McCahery, w. Bratton, S. Picciotto and C. Scott, eds.) (Clarendon Press, 1996) (452) Roberta Romano, State Competition for Corporate Charters, in THE NEW FEDERALISM: CAN THE STATES BE TRUSTED? 129 (J. Ferejohn and B. Weingast, eds.) (Hoover Institution, 1997). (453) E. Norman Veasey, The Defining Tension in Corporate Governance in America, 52 Bus. Law. 393 (1996-1997). (454) Roberta Romano, Corporate Law as the Paradigm for Contractual Choice of Law, in THE FALL AND RISE OF FREEDOM OF CONTRACT, 370 (Francis H. Buckley ed.) (Duke University Press; 1999). (455) William T. Allen, The Pride and the Hope of Delaware Corporate Law, 25 Del. J. Corp. L. 70 (2000). (456) Leo E. Strine, Jr., Delaware's Corporate-Law System: Is Corporate America Buying An Exquisite Jewel Or A Diamond In The Rough? A Response to Kahan & Kamar's Price Discrimination in the Market for Corporate Law, 86 Cornell L. Rev. 1257 (September, 2001 ). ( 457) Robert H. Sitkoff, Corporate Political Speech, Political Extortion, and the Competition/or Corporate Charters, 69 U. Chi. L. Rev. 1103 (2002). (458) ROBERTA ROMANO, THE ADVANTAGE OF COMPETITIVE FEDERALISM FOR SECURITIES REGULATION (AEI Press, 2002).

(5) Intermediate Views

(459) Ralph C. Ferrara & Marc I. Steinberg, Reappraisal of Santa Fe: Rule 1 Ob-5 and the New Federalism, 129 U. Pa. L. Rev. 263 (1980-1981). (460) Robert L. Knauss, Corporate Governance--A Moving Target, 79 Mich. L. Rev. 478 (1980-1981 ). (461) John C. Jr. Coffee, No Exit: Opting Out, the Contractual Theory of the Corporation and the Special Case ofRemedies, 53 Brook. L. Rev. 919 (1987-1988). ( 462) Ralph K. Winter, Jr., The Race for the Top Revisited: A Comment on Eisenberg, 89 Colum. L. Rev. 1526 (1989).

34 (463) William W. Bratton, Corporate Law's Race to Nowhere in Particular, 44 U. Toronto L. J. 401 (1994). (reviewing The Genius of American Corporate Law by Roberta Romano (Washington: The AEI Press 1993) pp. xvii, 161). (464) Edmund Kitch, Business Organization Law: State or Federal? An Inquiry into the Allocation of Political Competence in Relation to Issues of Business Organization Law in a Federal System, in EUROPEAN BUSINESS LA w: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION, 35 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991). (465) Martha B. Trofimenko & Catherine S. Mulholland, Delaware, U.S.A.: Home, Sweet Corporate Home, 1 Can. Int'l Law. 218 (1995). ( 466) Alvin K. Klevorick, The Race to the Bottom in a Federal System: Lessons from the World of Trade Policy, 14 Yale L. & Pol'y Rev. 177 (1996). (467) Timothy J. Brennan, Regulation and Competition as Complements, in Obtaining the best from Regulation and Competition (Topics in Regulatory Economics and Policy), 1 (Michael A. Crew & Menahem Spiegel eds.) (Springer Publishing, 2004). ( 468) Daniel Grennwood, The Mysterious Race to the Top/Bottom, 23 Yale Law and Policy Review 381 (2005).

D. Political Foundations of the Charter Market

(1) Regulatory Hostage Theory

(469) Oliver E. Williamson, Credible Commitments: Using Hostages to Support Exchange, 73 Am. Econ. Rev. 519 (1983). (470) ROBERTA ROMANO, THE GENIUS OF AMERICAN CORPORATE LA w (AEI Press, 1993). (471) William W. Bratton & Joseph McCahery, Regulatory Competition as Regulatory Capture: The Case of Corporate Law in the USA, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 207 (Joseph McCahery, William w. Bratton, Sol Picciotto & Colin Scott eds., New York: 1997). (472) Eric Kades, Freezing the Company Charter, 79 N. Car. L. Rev. 111 (2000).

(2) Interest Group Theory

(473) William R. Vance, Federal Control of Insurance Corporations, 17 Green Bag 83 (1905).

35 (474) Gordon Tullock, Welfare Costs of Tariffs, Monopolies and Theft, 5 West. Econ. J. 224 (June, 1967). (475) William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 Yale L.J. 663, 690-92 (1973-1974). (476) Anne 0. Krueger, The Political Economy of the Rent-Seeking Society, 64 Am. Econ. Rev. 291 (June 1974). (477) Henry N. Butler, Legal Change in an Interest Group Perspective: The Demise of Special Corporate Chartering (1982) (Ph.D. dissertation, V.P.I. & State Univ.) (478) Eric Stein, Lawyers, Judges, and the Making of a Transnational Constitution, 75 Am. J. Int'l L. 1 (Jan., 1981 ). (479) David C. Bayne, Lawyer and Corporate Governance: Conflict of Interest, 26 St. Louis U.L.J. 400 (1982). (480) William F. Shughart, II & Robert D. Tollison, Corporate Chartering: An Exploration in the Economics of Legal Change, 23 Econ. Inq. 585 (Oct., 1985) reprinted in THE POLITICAL ECONOMY OF RENT SEEKING, 391 (Charles Kershaw Rowley & Robert D. Tollison eds.) (Springer Publishing; 1988). (481) Fred S. McChesney, Rent Extraction and Rent Creation in the Economic Theory of Regulation, 16 J. L. Stud. 1 (Jan., 1987). (482) Jonathan R. Macey & Geoffrey P. Miller, Toward an Interest-Group Theory of Delaware Corporate Law, 65 Tex. L. Rev. 469 (1987). (483) Jonathan R. Macey, State Anti-Takeover Statutes: Good Politics, Bad Economics, 1988 Wis. L. Rev. 467 (1988). (484) Michael A. Crew & Charles K. Rowley, Dispelling the Disinterest In Deregulation, in THE POLITICAL ECONOMY OF RENT SEEKING, STUDIES IN PUBLIC CHOICE VOL. II 163 (Gordon Tullock ed.) (1988). (485) Susan P. Koniak, The Law Between the Bar and the State, 70 N.C. L. Rev. 1389 (1992). (486) Alfred F. Conard, Corporate Constituencies in Western Europe, 21 Stetson L. Rev. 73 (1991). (487) Ralph K. Winter, Jr., Paying Lawyers, Empowering Prosecutors, and Protecting Managers: Raising the Cost of Capital in America, 42 Duke L. J. 945 (1992-1993) ( 488) John E. Coffee, Jr., Unstable Coalitions: Corporate Governance as a Multi-Player Game, 78 Geo. L. J. 1495 (1989-1990). (489) Paul H. Rubin & Martin J. Bailey, The Role of Lawyers in Changing the Law, 23 J. Legal Studies 807 (1994). (490) Michael Hartmann, Bank Lawyers: A Professional Group Holding the Reins of Power, in PROFESSIONAL COMPETITION AND PROFESSIONAL POWER: LA WYERS, ACCOUNTANTS AND THE SOCIAL CONSTRUCTION OF MARKETS 77 (Yves Dezalay & David Sugarman eds.) (New York : Routledge, 1995).

36 (491) William J. Camey, The Political Economy of Competition for Corporate Charters, 26 J. Legal Stud. 303 (Jan., 1997). (492) Yves Dezalay, Between the State, Law and the Market: The Social and Professional Stakes in the Construction and Definition of a Regulatory Arena, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 59 (Joseph McCahery, William w. Bratton, Sol Picciotto, & Scott eds., New York: 1997). (493) William J. Camey, The Production of Corporate Law, 71 S. Cal. L. Rev. 715 (May, 1998). (494) William W. Bratton, Delaware Law as Applied Public Choice Theory: Bill Cary and the Basic Course after Twenty-Five Years, 34 Ga. L. Rev. 447 (1999-2000). (495) John W. Cioffi, Governing Globalization? The State, Law, and Structural Change in Corporate Governance, 27 J. L. & Soc. 572 (Dec., 2000). (496) John C. Coates IV, Explaining Variation in Takeover Defenses: Blame the Lawyers, 89 Cal. L. Rev. 1301 (2001). (497) GENE M. GROSSMAN & ELHANAN HELPMAN, SPECIAL INTEREST POLITICS (MIT Press, 2001). (498) MARK J. ROE, POLITICAL DETERMINANTS OF CORPORATE GOVERNANCE: POLITICAL CONTEXT, CORPORATE IMPACT (New York: Oxford University Press, 2003) (2002). ( 499) Omri Yadlin, Commentary on Sitkojf, 69 U Chi L Rev 1167 (2002). (500) Peter A. Gourevitch, The Politics of Corporate Governance Regulation, 112 Yale L. J. 1829 (May, 2003) (reviewing MARK J. ROE, POLITICAL DETERMINANTS OF CORPORATE GOVERNANCE: POLITICAL CONTEXT, CORPORATE IMPACT (New York: Oxford University Press, 2003) (2002)) (501) SYMPOSIUM: SMITH v. VAN GORKOM:, Jonathan R. Macey, Insights About CE.Os, Corporate Law Rules, and The Jurisdictional Competition for Corporate Charters, 96 Nw. U.L. Rev. 607 (Winter, 2002). (502) William W. Bratton, Gaming Delaware, 40 Willamette L. Rev. 853 (Fall, 2004). (503) Jonathan R. Macey, Wall Street in Turmoil: Federal State Relations Post Eliot Spitzer, 70 Brook. L. Rev. 117 (2004) . (504) John W. Cioffi, The State of the Corporation: State Power, Politics, Policymaking and Corporate Governance in the United States, Germany and France, in TRANS- ATLANTIC POLICYMAKING IN AN AGE OF AUSTERITY, 253 (Martin Shapiro & Martin Levin eds.) (Georgetown University Press, 2004). (505) Jonathan Macey, Politics on Wall Street: The Implications of Eliot Spitzer on State- Federal Relations in the Regulation of Public Corporations and Capital Markets in the United States, 70 Brook. L. Rev. 117 (2004 - 2005). (506) Jonathan R. Macey, Delaware: Home of The World's Most Expensive Raincoat, 33 Hofstra L. Rev. 1131 (Summer, 2005)

37 (507) Pietro Tommasino, The Political Economy of Investor Protection, (Bank of Italy, Econ. Research Dept. Econ. Working Papers No. 604) (Dec., 2006). (508) John W. Cioffi, Building Finance Capitalism: The Regulatory Politics of Corporate Governance Reform in the United States and Germany, in THE STATE AFTER STATISM: NEW STATE ACTIVITIES IN THE AGE OF GLOBALIZATION AND LIBERALIZATION (Jonah Levy ed.) (Harvard University Press, 2006). (509) Lucian A. Bebchuk & Zvika Neeman, Investor Protection and Interest Group Politics (Nat'l Bureau of Econ. Research, Working Paper no. 13702, 2007). (510) Enrico Perotti & Paolo Volpin, Politics, Investor Protection and Competition (Eur. Corp. Gov. Ins. (ECGI), Working Paper No. 162/2007) (May 2007). (511) John W. Cioffi, Revenge of the Law? Securities Litigation Reform and Sarbanes- Oxley's Structural Regulation of Corporate Governance, in CREATING COMPETITIVE MARKETS: THE POLITICS OF REGULATORY REFORM, 60 (Marc K. Landy, Martin A. Levin & Martin Shapiro eds.) (Brookings Institution Press, 2007). (512) Steen Thomsen, The Hidden Meaning of Codes: Corporate Governance and Investor Rent Seeking, 7 Eur. Bus. Org. L. Rev. (EBOR) 845 (Dec., 2007).

(3) The Lawyer's Role in Corporate Governance

(513) Peter S. Grosscup, Corporation Problem and the Lawyer's Part in Its Solution, 39 Am. L. Rev. 835 (1905). (514) George D. Hornstein, The Counsel Fee in Stockholder's Derivative Suits, 39 Colum. L. Rev. 784 (1939). (515) George D. Hornstein, Legal Therapeutics: The Salvage Factor in Counsel Fee Awards, 69 Harv. L. Rev. 658 (1955-1956). (516) BERYL HAROLD LEVY, CORPORATION LAWYER: SAINT OR SINNER? (Chilton Co.; 1961). (517) Sherwin Rosen, The Market for Lawyers, 35 J. L. & Econ. 215 (1992). ( 518) Sol Picciotto & Joseph McCahery, Creative Lawyering and the Dynamics ofBusiness Regulation, in PROFESSIONAL COMPETITION AND PROFESSIONAL POWER: LA WYERS, ACCOUNTANTS AND THE SOCIAL CONSTRUCTION OF MARKETS 238 (Yves Dezalay & David Sugarman eds.) (New York: Routledge, 1995). (519) E. Norman Veasey, State-Federal Tension in Corporate Governance and the Professional Responsibilities ofAdvisors, 28 J. Corp. L. 441 (2003). (520) David B. Wilkins & John C. Coates. How Corporations Purchase Legal Services (2003). (521) John C. Coffee, Jr., Gatekeeper Failure and Reform: The Challenge of Fashioning Relevant Reforms, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS,

38 STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 599 (Klaus J. Hopt, Eddy Wyrneersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (522) JOHN C. COFFEE, JR., GATEKEEPERS: THE PROFESSIONS AND CORPORATE GOVERNANCE (Oxford University Press; 2006).

(4) Corporate Law Drafting Process

(523) Ernest L. Folk, III, Some Reflections of a Corporation Law Draftsman, 42 Conn. Bar J. 409 (1968). (524) Mae Kuykendall, Reflections on a Corporate Law. Draftsman: Ernest L. Folk's Lessons for Writing and Judging Corporate Law, 35 Rutgers L.J. 391 (2003-2004).

(5) Political Foundations of Corporate Governance

(525) John Pound, The Rise ofthe Political Model of Corporate Governance and Corporate Control, 68 N.Y.U. L. Rev. 1003 (1993) (526) Larry E. Ribstein, Politics, Adaptation and Change in Corporate Law, 8 Aust. J. Corp. L. (AJCL) 246 (Feb., 1998).

(6) Public Choice Theory

(527) Robert G. Noll, Economic Perspectives on the Politics of Regulation, in Handbook of Industrial Organization, Vol. II, 1254 (Richard Schrnalensee & Robert D. Willig eds.) (1989). (528) Jonathan R. Macey, Federal Deference to Local Regulators and the Economic Theory ofRegulation: Toward a Public-Choice Explanation of Federalism, 76 Va L Rev 265 (1990). (529) Mary E. Kostel, A Public Choice Perspective on the Debate over Federal Versus State Corporate Law, 79 Va. L. Rev. 2129 (Nov., 1993). (530) Erin A. O'Hara, Opting Out of Regulation: A Public Choice Analysis of Contractual Choice ofLaw, 53 Vand. L. Rev. 1551 (2000). (531) Jonathan R. Macey, The 'Demand' for International Regulatory Cooperation: A Public Choice Perspective, in TRANSATLANTIC REGULATORY CO-OPERATION: LEGAL PROBLEMS AND POLITICAL PERSPECTIVES, 14 7 George A. Berrnann, Matthias Herdegen, & Peter L. Lindseth (eds.) (Oxford University Press 2000).

39 (532) Andrew T. Guzman, Public Choice and International Regulatory Competition, 90 Geo. L.J. 971 (Apr., 2002).

(7) Democracy and Charter Competition

(533) Daniel J.H. Greenwood, Democracy and Delaware: The Puzzle of Corporate Law (GWU Law School, Public Law Research Paper No. 55; 2002) available at (Last visited Feb. 2, 2008). (534) Kent Greenfield, Democracy and the Dominance of Delaware in Corporate Law, 67 Law & Contemp. Probs. 135(2004).

E. Dimensions of Charter Market

(1) Charter Market Dynamics

(535) Richard W. Jennings, The Role of the States in Corporate Regulation and Investor Protection, 23 Law & Contemp. Probs. 193 (1958). (536) Barry D. Baysinger, A Theory of the Efficiency ofJurisdictional Choice: The Case of Corporate Federalism (Sept. 1978) (Unpublished Ph.D. dissertation, Virginia Polytechnic Inst. & State Univ.). (537) Barry D. Baysinger & Henry N. Butler, The Role of Corporate Law in the Theory of the Firm, 28 J.L. & Econ. Rev. 179 (1985). (538) William J. Camey, Federalism and Corporate Law: A Non-Delaware View of the Results of Competition, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 153 (Joseph McCahery, William W. Bratton, Sol Picciotto & Colin Scott eds., New York: 1997). (539) Ian Ayres, Supply-Side Inefficiencies in Corporate Charter Competition: Lessons from Patents, Yachting and Bluebooks, 43 U. Kan. L. Rev. 541 (1995). (540) William W. Bratton & Joseph A. McCahery, The New Economics of Jurisdictional Competition: Devolutionary Federalism in a Second-Best World, 86 Geo. L.J. 201 (1997-1998). (541) J. William Callison, Federalism, Regulatory Competition, and the Limited Liability Movement: The Coyote Howled and the Herd Stampeded, 26 J. Corp. L. 951 (2000- 2001). (542) Michal Barzuza, Price Considerations in the Market for Corporate Law, 26 Cardozo L. Rev. 127 (November, 2004).

40 (543) Oren Bar-Gill, Michal Barzuza & Lucian A. Bebchuk, The Market for Corporate Law, 162 J. Ins. & Theo. Econ. 134 (2006). (544) William Wilson Bratton & Joseph A. McCahery, The Equilibrium Content of Corporate Federalism, 41 WAKE FOREST L. REV. 619 (2006). (545) Henry N. Butler, Smith v. Van Gorkom, Jurisdictional Competition, and the Role of Random Mutations in the Evolution of Corporate Law, 45 Washburn L.J. 267 (Winter, 2006). (546) Lawrence A. Hamermesh, The Policy Foundations of Delaware Corporate Law, 106 Colum. L. Rev. 1749 (November, 2006) .. (547) Henry N. Butler, Smith v. Van Gorkom, Jurisdictional Competition, and the Role of Random Mutations in the Evolution of Corporate Law, 45 Washburn L.J. 267 (Winter, 2006).

(2) Innovation in Business Organizations Law

(548) Susan Rose-Ackerman, Risk Taking and Reelection: Does Federalism Promote Innovation?, 9 J. Legal Stud. 593 (Jun., 1980). (549) Michael J. Powell, Professional Innovation: Corporate Lawyers and Private Lawmaking, 18 L. & Soc. Inq. 423 (Summer 1993 ). (550) Marcel Kahan & Michael Klausner, Standardization and Innovation in Corporate Contracting (or "The Economics ofBoilerplate''), 83 Va. L. Rev. 713 (1997). (551) Curtis J. Milhaupt, The Market For Innovation In The United States And Japan: Venture Capital And The Comparative Corporate Governance Debate, 91 Nw. U.L. Rev. 865 (Spring, 1997). (552) Joseph A. McCahery & Erik P.M. Vermeulen, Innovative Business Forms for High Tech Start-ups in Europe, 13 Eur. Bus. L. Rev. 243 (2002). (553) Katharina Pistor et al., Innovation in Corporate Law, 31 J. Comp. Econ. 676 (2003). (554) Roberta Romano, The States as a Laboratory: Legal Innovation and State Competition for Corporate Charters, 23 Yale J. Reg. 209 (2006). (555) Joseph A. McCahery, Erik P. M. Vermeulen, Masato Hisatake, Jun Saito, Traditional and Innovative Approaches to Legal Reform: The 'New Company Law', 8 Eur. Bus. Org. L. Rev. (EBOR) 7 (2007).

(3) Density Dependent View (Network Effects Theory)

(556) William Brian Arthur, Competing Technologies, Increasing Returns, and Lock-in by Historical Events, 99 Econ. J. 116 (1989).

41 (557) WILLIAM BRIAN ARTHUR, INCREASING RETURNS AND PATH DEPENDENCE IN THE ECONOMY (ECONOMICS, COGNITION, AND SOCIETY) (University of Michigan Press; 1994). (558) Richard M. Buxbaum, Is 'Network' a Legal Concept?, 149 J. Ins. & Theo. Econ. 698 (1994). (559) Stan J. Liebowitz & Stephen E. Margolis, Network Externality: An Uncommon Tragedy, 8 J. Econ. Pers. 133 (Spring 1994). (560) Michael Klausner, Corporations, Corporate Law, and Networks of Contracts, 81 Va. L. Rev. 757 (1995). (561) Marcel Kahan & Michael Klausner, Path Dependence in Corporate Contracting: Increasing Retuns, Herd Behavior and Cognitive Biases, 74 Wash. U. L. Q. 347 (1996). (562) Marcel Kahan & Michael Klausner, Standardization and Innovation in Corporate Contracting (or "The Economics ofBoilerplate''), 83 Va. L. Rev. 713 (1997). (563) Brett H. McDonnell, Getting Stuck Between Bottom and Top: State Competition for Corporate Charters in the Presence of Network Effects, 31 Hofstra L. Rev. 681 (Spring, 2003) (564) Bruce Easmunt, Delaware's Dominance in the Field of Corporate Law: Actual Superiority, or Merely the Assumption Thereof?, (George Mason University Working Paper) available at (Last visited Feb. 18, 2008).

(4) Symbiotic Federalism and the Dual Control of the Corporations

(565) Thomas L. Hazen, Corporate Chartering and the Securities Markets: Shareholder Suffrage, Corporate Responsibility and Managerial Accountability, 1978 Wis. L. Rev. 391, 437 (1978). (566) Eric A. Lustig, The Emerging Role of the Federal Tax Law in Regulating Hostile Corporate Takeover Defenses: The New Section 5881 Excise Tax on Greenmail, 40 U. Fla. L. Rev. 789 (1988). (567) Joel Seligman, The New Corporate Law, 59 Brook. L. Rev. 1 (1993). (568) William W. Bratton, Corporate Law's Race to Nowhere in Particular, 44 U. Toronto L.J. 401 (1994) (569) Pierre Salmon, Vertical Competition in a Unitary State, in COMPETITION & STRUCTURE: THE POLITICAL ECONOMY OF COLLECTIVE DECISIONS: ESSAYS IN HONOR OF ALBERT BRETON 239 (Gianluigi Galeotti, Pierre Salmon & Ronald Wintrobe eds.) (Cambridge University Press: 2000). (570) Mark J. Roe, Delaware's Competition, 117 Harv. L. Rev. 588 (2003).

42 (571) Robert B. Thompson, Collaborative Corporate Governance: Listing Standards, State Law, and Federal Regulation, 38 Wake Forest L. Rev. 961 (2003). (572) Renee Jones, Rethinking Corporate Federalism in the Era of Corporate Reform, 29 J. Corp. L. 625 (2004 ). (573) Steven A. Bank, Tax, Corporate Governance, and Norms, 61 Wash. & Lee L. Rev. 1159 (2004). (574) Marcel Kahan & Edward Rock, Symbiotic Federalism and the Structure of Corporate Law, 58 Vand. L. Rev. 1573 (October, 2005). (575) Mark J. Roe, Regulatory Competition in Making Corporate Law in the United States- -and its Limits, 21 Ox. Rev. Econ. Pol. 232 (Summer 2005). (576) Robert B. Thompson, Delaware, the Feds, and the Stock Exchange: Challenges to the First State as First in Corporate Law, 29 Del. J. Corp. L. 779 (2004). (577) Mark J. Roe, Delaware's Politics, 118 Harv. L. Rev. 2491 (2005). (578) Mark J. Roe, Regulatory Competition in Making Corporate Law in the United States - and its Limits, 21 Ox. Rev. Econ. Pol. 232 (2005). (579) Robert B. Ahdieh, From "Federalization" to "Mixed Governance" in Corporate Law: A Defense ofSarbanes-Oxley, 53 Buffalo L. Rev. 721 (Summer, 2005). (580) Pierre-Luc Arsenault, The Case for Federal Threats in Corporate Governance, 118 Harv. L. Rev. 2726 (June, 2005). (581) William W. Bratton & Joseph McCahery, The Equilibrium Content of Corporate Federalism, 41 Wake Forest L. Rev. 619 (2006). (582) Renee M. Jones, Modern Federalism Issues and American Business: Article & Essay: Does Federalism Matter? Its Perplexing Role in the Corporate Governance Debate, 41 Wake Forest L. Rev. 879 (Fall, 2006). (583) Robert B. Thompson, Corporate Federalism in the Administrative State: The SEC's Discretion to Move the Line Between the State and Federal Realms of Corporate Governance, 82 Notre Dame L. Rev. 1143 (March, 2007). (584) Timothy P. Glynn, Delaware's Vantage Point: The Empire Strikes Back in the Post- Post-Enron Era, 103 Nw. L. Rev. (forthcoming 2009), available at .

(5) Corporate Governance Convergence

(585) Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. Econ. & Org. 225 (Autumn, 1985). (586) John E. Coffee, Jr., The Future as History: The Prospect for Global Convergence in Corporate Governance and Its Implications, 93 Nw. U. L. Rev. 641 (1999).

43 (587) Douglas M. Branson, The Very Uncertain Prospect of Global Convergence in Corporate Governance, 34 Cornell Int'l L.J. 321 (2001). (588) Ronald J. Gilson, Globalization of Corporate Governance: Convergence of Form or Function, 49 Am. J. Comp. L. 329 (2001). (589) Henry Hansmann & Reinier Kraakman, The End of History for Corporate Law, 89 Geo. L. J. 439 (January, 2001). (590) Henry Hansmann & Reinier Kraakman, Toward a Single Model of Corporate Law?, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 56 (Joseph McCahery ed.) (Oxford University Press; 2002). (591) Eddy Wymeersch, Convergence or Divergence in Corporate Governance: Patterns in Western Europe?, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 230 (Joseph McCahery ed.) (Oxford University Press; 2002). (592) Steen Thomsen, The Convergence of Corporate Governance Systems to European and Anglo-American Standards, 4 Eur. Bus. Org. L. Rev. (EBOR) 31 (July 2003). (593) Jeffrey N. Gordon, Convergence on Shareholder Capitalism: An Internationalist Perspective, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LA w AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 437 (Curtis J. Milhaupt eds., New York: 2003). (594) Gerard Hertig, Convergence of Substantive Law and Convergence of Enforcement: A Comparison, CONVERGENCE AND PERSISTENCE IN CORPORA TE GOVERNANCE, 328 (Jeffrey N. Gordon & Mark J. Roe, eds.) (Cambridge, Cambridge University Press 2004). (595) Richard M. Buxbaum, Diffusion of Law, in International Encyclopedia of the Social Sciences ( electronic version, Science Direct 2004 Update) () (2004). (596) Marc Goergen, Marina Martynova, & Luc Renneboog, Corporate Governance Convergence: Evidence From Takeover Regulation Reforms in Europe, 21 Oxf. Rev. Econ. Pol. 243 (Summer 2005). (597) Curtis J. Milhaupt, In the Shadow of Delaware? The Rise of Hostile Takeovers in Japan, 105 Colum. L. Rev. 2171 (Nov., 2005). (598) MATHIAS M. SIEMS, CONVERGENCE IN SHAREHOLDER LA w (Cambridge University Press, 2007).

(6) Takeover Market Dynamics

(599) Henry G. Manne, Mergers and the Market for Corporate Control, 73 J. Pol. Econ. 110 (Apr., 1965). (600) William Cary, Corporate Devices Used to Insulate Management from Attack, 39 Antitrust L.J. 318 (1969-1970).

44 (601) Donald C. Langevoort, State Tender-Offer Legislation: Interests, Effects, and Political Competency, 62 Cornell L. Rev. 213 (1977). (602) Arthur Liman, Has the Tender Movement Gone Too Far?, 23 N.Y.L. Sch. L. Rev. (1978). (603) Theodore R. Boehm, State Interests and Interstates Commerce: A Look at the Theoretical Underpinntings of Takeover Legislation, 36 Wash. & Lee L. Rev. 733 (1979). (604) Frank H. Easterbrook & Daniel R. Fischel, The Proper Role of a Target's Management in Responding to a Tender Offer, 94 Harv. L. Rev. 1161 (1981). (605) Michael C. Jensen & Richard S. Ruback, The Market for Corporate Control: The Scientific Evidence, 11 J. Fin. Econ. 5 (1983). (606) Paul M. Hirsch, From Ambushes to Golden Parachutes: Corporate Takeovers as an Instance of Cultural Framing and Institutional Integration, Am. J. Soc. 800 (Jan., 1986). (607) Allen D. Boyer, Federalism and Corporation Law: Drawing the Line in State Takeover Regulation, 47 Ohio St. L.J. 1037 (1986). (608) Robert B. Thompson, Defining the Federal and State Realms of Tender Offer Regulation, 64 Wash. U.L.Q. 1057 (1986). (609) Deborah A. DeMott, Comparative Dimensions of Takeover Regulation, 65 Wash. U. L. Q. 69 (1987). (610) Steven Gitelman, Beyond CTS: A Limited Defense of State Tender Offer Disclosure Requirements, 54 U. Chi. L. Rev. 657 (1987). (611) Donald C. Langevoort, The Supreme Court and the Politics of Corporate Takeovers: A Comment on CTS Corp. v. Dynamics Corp. of America, 101 Harv. L. Rev. 96 (1987). (612) Theodore W. Grippo, In Defense of State Takeover Laws, 8 N. Ill. U.L. Rev. 273 (1988). (613) Jed Rubenfeld, State Takeover Legislation and the Commerce Clause: The "Foreign" Corporations Problem, 36 Clev. St. L. Rev. 355 (1988). (614) Arthur R. Pinto, The Constitution and the Market for Corporate Control: State Takeover Statutes after CTS Corp., 29 Wm. & Mary L. Rev. 699 (1988). (615) John C. Coffee, Jr., The Uncertain Case for Takeover Reform: An Essay on Stockholders, Stakeholders and Bust-Ups, 1988 Wis. L. Rev. 435 (1988). ( 616) Thomas J. Bamonte, The Dynamics of State Protectionism: A Short Critique of the CTS Decision, 8 N. Ill. U. L. Rev. 259 (1987-1988). (617) Michael C. Jensen, Takeovers: Their Causes and Consequences, 2 J. Econ. Persp. 21 (Winter 1988). (618) Laurance Schumann, State Regulation of Takeovers and Shareholder Wealth: The Case ofNew York's 1985 Takeover Statutes, 19 Rand J. Econ. 557 (Winter, 1988).

45 (619) Bayless Manning, State Competition: Panel Response, 8 Cardozo L. Rev. 779 (1987). (620) SHARON PAMEPINTO, CAN STATES STOP CORPORATE TAKEOVERS (Investor Responsibility Research Center; 1987). (621) Roberta Romano, The Political Economy of Takeover Statutes, 73 Va. L. Rev. 111 (Feb., 1987). (622) M. Andrew G. T. Moore II, State Competition: Panel Response, 8 Cardozo L. Rev. 779 (1987). (623) Dale A. Oesterle, Delaware's Takeover Statute: Of Chills, Pills, Standstills, and Who Gets Iced, 13 Del. J. Corp. L. 879 (Summer, 1988). (624) Jonathan R. Macey, State Anti-Takeover Legislation and the National Economy, 1988 Wis. L. Rev. 467 (1988). (625) Henry N. Butler, Corporation-Specific Anti-Takeover Statutes and the Market for Corporate Charters, 1988 Wis. L. Rev. 365 (May/Jun., 1988). (626) Jeffry Netter & Annette Poulsen, State Corporation Laws and Shareholders: The Recent Experience, 18 Fin. Mgmt. 29 (Autumn, 1989). (627) SHARON PAMEPINTO, PATRICK S. MCGURN & ADAM B. SPECTOR, STATE TAKEOVER LA ws (Investor Responsibility Research Center; 1989). (628) Alan E. Garfield, State Competence to Regulate Corporate Takeovers: Lessons From State Takeover Statutes, 17 Hofstra L. Rev. 535 (Spring 1989). (629) Henry N. Butler, State Takeover Legislation, The Market for Corporate Charters, and the Scope ofFederal Intervention: A Comment on Hitzeman, Indiana's Control Share Acquisition Statute, 27 Am. Bus. L. J. 291 (1989). (630) Alan E. Garfield, Evaluating State Anti-Takeover Legislation: A Broadminded New Approach to Corporation Law or "A Race to the Bottom"?, 1990 Colum. Bus. L. Rev. 119 (1990).

1 (631) Caroline Bradley, Corporate Control: Markets and Rules, 53 Modem L. Rev. 170 (Mar., 1990). (632) Elliott J. Weiss, Whose Rules Should Govern Takeovers: Delaware's, the Alf's, or Martin Lipton's, 33 Ariz. L. Rev. 761 (1991). (633) John S. Jahera, Jr. & William Pugh, State Takeover Legislation: The Case of Delaware, 7 J. L. Econ. & Org. 410 (Autumn, 1991). (634) Gerald F. Davis, Agents without Principles? The Spread of the Poison Pill through the Intercorporate Network, 36 Admin. Sci. Q. 583 (Dec., 1991). (635) Roberta Romano, Competition for Corporate Charters and the Lesson of Takeover Statutes, 61 Ford. L. Rev. 843 (1993). (636) Mark J. Roe, Takeover Politics, in THE DEAL DECADE: WHAT TAKEOVERS AND LEVERAGED BUYOUTS MEAN FOR CORPORA TE GOVERNANCE, 321 (Margaret M. Blair ed.) (Brookings Institution Press, 1993).

46 (637) Roberta Romano, Rethinking Takeover Regulation, 5 J. App. Corp. Fin. 47 (Fall 1992). (638) Roberta Romano, A Guide to Takeovers: Theory, Evidence and Regulation, 9 Yale J. Reg. 119 (1992). (639) Robert Comment & G. William Schwert, Poison Pill or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures, 39 J. Fin. Econ. 3 (Sept. 1995). (640) Sunil Wahal, Kenneth Wiles, Marc Zenner, Who Opts Out of State Antitakeover Protection? The Case ofPennsylvania's SB 1310, 24 Fin. Mgmt. 22 (Autumn 1995). (641) Jonathan R. Macey, The Legality of the Shareholder Rights By-Law in Delaware: Preserving the Market for Corporate Control, 10 J. Appl. Corp. Fin. 63 ( 1998). (642) Lucian Arye Bebchuk & Allen Ferrell, Federalism and Corporate Law: The Race to Protect Managers/ram Takeovers, 99 Colum. L. Rev. 1168 (1999). (643) Lucian Arye Bebchuk & Allen Ferrell, A New Approach to Takeover Law and Regulatory Competition, 87 Va. L. Rev. 111 (2001). (644) Lucian Arye Bebchuk & Allen Ferrell, On Takeover Law and Regulatory Competition, 57 Bus. L. 1047 (2002). (645) Reinier H. Kraakman, & Bernard Black, Delaware's Takeover Law: The Uncertain Search/or Hidden Value, 96 Nw. L. Rev. 521 (2002). (646) Robert B. Thompson, Takeover Regulation after the 'Convergence' of Corporate Law, 24 Sydney L. Rev. 323 (Sept., 2002). (647) Ronald J. Gilson, Lipton and Rowe's Apologia for Delaware: A Short Reply, 27 Del. J. Corp. L. 37 (2002). (648) William T. Allen, Jack B. Jacobs & Leo E. Strine, Jr., The Great Takeover Debate: A Meditation On Bridging the Conceptual Divide, 69 U. Chi. L. Rev. 1067 (2002). (649) Theo Raaijmakers, Takeover Regulation in Europe and America: The Need for Functional Convergence in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 205 (Joseph McCahery ed.) (Oxford University Press; 2002). (650) Lucian Bebchuk & Alma Cohen, Firms' Decisions Where to Incorporate, 46 J.L. & Econ. 383 (2003). (651) Stefan Grundman, The Market for Corporate Control: The Legal Framework, Alternatives, and Policy Considerations, in CORPORATE GOVERNANCE IN CONTEXT: CORPORATIONS, STATES, AND MARKETS IN EUROPE, JAPAN, AND THE US, 421 (Klaus J. Hopt, Eddy Wymeersch, Hideka Kanda & Harald Baum eds.) (Oxford University Press, 2005). (652) John K. Wald & Michael S. Long, The Effect of State Laws on Capital Structure, 83 J. Fin. Econ. 297 (Feb. 2007). (653) John Armour & David A. Skeel, Jr., Who Writes the Rules for Hostile Takeovers, and Why?--The Peculiar Divergence of US. and UK. Takeover Regulation, 95 Geo. L.J. 1727 (August, 2007).

47 (654) Sharon Hannes, The Market for Takeover Defenses, 101 Nw. L. Rev. 125 (Winter 2007).

(7) The Role of Judiciary

(655) Roscoe Pound, Visitatorial Jurisdiction over Corporations in Equity, 49 Harv. L. Rev. 369 (1935-1936). (656) Peter Hay, Federal Jurisdiction ofthe Common Market Court, 12 Am. J. Comp. L. 21 (1963). (657) Richard M. Buxbaum, Article 177 of the Rome Treaty as a Federalizing Device, 21 Stan. L. Rev. 1041 (1969). (658) Eric Stein, Courts and Free Markets - Perspectives from the United States and Europe, in COURTS AND FREE MARKETS - PERSPECTIVES FROM THE UNITED STATES AND EUROPE, VOL. I, 3 (Terrance Sandalow & Eric Stein eds.) (Clarendon Press; 1982). (659) John C. Coffee Jr., Litigation and Corporate Governance: An Essay on Steering Between Scylla and Charybdis, 52 Geo. Wash. L. Rev. 789 (1983-1984). (660) Lyman Johnson, Delaware Judiciary and the Meaning of Corporate Life and Corporate Law, 68 Tex. L. Rev. 865 (1989-1990). (661) Jonathan R. Macey, Courts and Corporations: A Comment on Coffee, 89 Colum. L. Rev. 1692 (1990). (662) Jeffrey N. Gordon, Corporations, Markets, and Courts, 91 Colum. L. Rev. 1931 (Dec., 1991). (663) Maurice A. Hartnett, III, The History of the Delaware Court of Chancery, 48 Bus. Law. 367 (1992). (664) E. Norman Veasey, The National Court of Excellence, 48 Bus. Law. 357 (1992- 1993). (665) William H. Rehnquist, The Prominence of the Delaware Court of Chancery in the State-Federal Joint Venture ofProviding Justice, 48 Bus. Law. 351 (1992-1993). (666) William T. Quillen & Michael Hanrahan, A Short History of the Delaware Court of Chancery-1792-1992, 18 Del. J. Corp. L. 819 (1993). (667) William T. Quillen et al., Trustees of Equity: The Judges of the Delaware Court of Chancery, in THE DELAWARE BAR IN THE TWENTIETH CENTURY 393 (Helen L. Winslow, Anne E. Bookout & Patricia C. Hannigan eds.) (Delaware State Bar Association: 1994). (668) Daniel A. Fulco, Delaware's Response to Inefficient, Costly Court Systems and a Comparison to Federal Reform, 20 Del. J. Corp. L. 937 (1995).

48 (669) Edward B. Rock, Saints and Sinners: How Does Delaware Corporate Law Work?, 44 UCLA L. Rev. 1009 (1997). (670) E. Norman Veasey, The Defining Tension in Corporate Governance in America, 52 Bus. Law. 393 (Feb. 1997). (671) ABA Ad Hoc Committee on Business Courts, Business Courts: Towards a More Efficient Judiciary, 52 Bus. Law. 947 (1997). (672) David A. Skeel, Jr., The Unanimity Norm in Delaware Corporate Law, 83 Va. L. Rev. 127 (Feb., 1997). (673) Kurt M. Heyman, Expedited Proceedings in the Delaware Court of Chancery: Things ofthe Past, 23 Del. J. Corp. L. 145 (1998). (674) MIGUEL POIARES MADURO, WE THE COURT: THE EUROPEAN COURT OF JUSTICE AND THE EUROPEAN ECONOMIC CONSTITUTION: A CRITICAL READING OF ARTICLE 30 OF THE EC TREATY (Oxford: Hart Publishing; 1998). (675) E. Norman Veasey, An Economic Rationale for Judicial Decisionmaking in Corporate Law, 1 Del. L. Rev. 169 (1998). (676) Jill E. Fisch, The Peculiar Role of the Delaware Courts in the Competition for Corporate Charters, 68 U. Cin. L. Rev. 1061 (2000). (677) Michael J. Whincop, The Immanent Conservatism of Corporate Adjudication: Thoughts on Kingsford Smith's 'Interpreting the Corporations Law, 22 Sydney L. Rev. 273 (June, 2000). (678) E. Norman Veasey, The Roles of the Delaware Courts in Merger and Acquisition Litigation, 26 Del. J. Corp. L. 849 (2001). (679) Richard M. Buxbaum, Federalism and Corporate Litigation, 2 Eur. Bus. Org. L. Rev. 493 (2001). (680) E. Norman Veasey, The Many Facets of Judicial Independence Diamond, 20 Quinnipiac L. Rev. 779 (Spring, 2001). (681) David A. Skeel, Jr., Shaming in Corporate Law, 149 U. Pa. L. Rev. 1811 (June, 2001). (682) Richard Buxbaum, Federalism and Corporate Litigation, 2 Eur. Bus. Org. L. Rev. (EBOR) 493 (2001). (683) Harvey Gelb, Corporate Governance Guidelines - A Delaware Response, 1 Wyo. L. Rev. 523 (2001). (684) S0ren Friis Hansen, From C 212 to L 212 - Centros Revisited, 2 Eur. Bus. Org. L. Rev. (EBOR) 141 (2001). (685) Ronald J. Gilson, Lipton & Rowe's Apologia for Delaware: A Short Reply, 27 Del. J. Corp. L. 37 (2002). (686) Luca Enriques, Do Corporate Law Judges Matter? Some Evidence from Milan, 3 Eur. Bus. Org. L. Rev. 765 (2002).

49 (687) Leo E. Strine, Jr., The Inescapably Empirical Foundation of the Common Law of Corporations, 27 Del. J. Corp. L. 499 (2002). (688) E. Norman Veasey, Law and Fact in Judicial Review of Corporate Transactions, 10 U. Miami Bus. L. Rev. 1 (2002). (689) Randy J. Holland & David A. Skeel Jr., Deciding Cases Without Controversy, 5 Del. L. Rev. 115 (2002). (690) Luca Enriques, Off the Books, But on the Record: Evidence from Italy on the Relevance of Judges to the Quality of Corporate Law, in GLOBAL MARKETS, DOMESTIC INSTITUTIONS: CORPORATE LAW AND GOVERNANCE IN A NEW ERA OF CROSS-BORDER DEALS 257 (Curtis J. Milhaupt eds., New York: 2003). (691) E. Norman Veasey, The Judiciary's Contribution to the Reform of Corporate Governance, 4 J. Corp. L. Stud. 225 (2004). (692) E. Norman Veasey, The Judiciary's Contribution to the Reform of Corporate Governance, 4 J. Corp. L. Stud. 225 (2004). (693) Marius Josephus Jitta, Procedural Aspects of the Right of Inquiry, in THE COMPANIES AND BUSINESS COURT FROM A COMPARATIVE LAW PERSPECTIVE, 1 (Marius Josephus Jitta ed.) (Kluwer; 2004). (694) Huub Willems, The Companies and Business Court: Some Introductory Remarks,, in THE COMPANIES AND BUSINESS COURT FROM A COMPARATIVE LAW PERSPECTIVE, 181 (Marius Josephus Jitta ed.) (Kluwer; 2004). (695) Anthony Driessen, Regulation of Disputes in Companies in the Netherlands, in THE COMPANIES AND BUSINESS COURT FROM A COMPARATIVE LAW PERSPECTIVE, 125 (Marius Josephus Jitta ed.) (Kluwer; 2004). (696) Martin Gelter & Mathias M. Siems, Judicial Federalism in the ECJ's Berlusconi Case: Toward More Credible Corporate Governance and Financial Reporting, 46 Harv. Int'l L.J. 487 (2005). (697) Sean J. Griffith, Good Faith Business Judgment: A Theory of Rhetoric in Corporate Law Jurisprudence, 55 Duke L.J. 1 (October, 2005). (698) Marcel Kahan, The Demand for Corporate Law: Statutory Flexibility, Judicial Quality, or Takeover Protection?, 22 J. Law Econ. Org. 340 (Oct., 2006). (699) Roman Seer, The ECJ on the Verge of a Member State Friendly Judicature? - Annotation to the Marks & Spencer Judgement, ECJ 13. 12. 2005, C-446/03, 2006, 3 Eur. Co. & Fin. L. Rev. (ECFR) 237 (Jun., 2006). (700) Vino Timmerman, Welfare, Fairness and the Role of Courts in a Simple and Flexible Private Company Law, 8 Eur. Bus. Org. L. Rev. (EBOR) 325 (Sept., 2007). (701) Maarten J. Kroeze, The Companies and Business Court as a Specialized Court, 2007 Ondernemingsrecht 86 (2007). (702) Jens C. Dammann & Henry Hansmann, A Global Market for Judicial Services, (Uni. of Texas Law, Law and Econ Research Paper No. 98) ((March 15, 2007)) available at http://ssrn.com/abstract=976115. See also, Jens C. Dammann & Henry Hansmann,

50 Extraterritorial Courts for Corporate Law (Mar. 2006) available at . (703) Levinus Timmerman, Company Law and the Dutch Supreme Court, Some Remarks on Contextualism and Traditionalism in Company Law, 2007 Ondememingsrecht 91 (2007).

(8) Charter Market Failure

(a) Strength of Competition in the Charter Market

(704) Mark J. Loewenstein, Delaware as Demon: Twenty-Five Years After Professor Cary's Polemic, 71 U. Colo. L. Rev. 497 (2000). (705) Marcel Kahan & Ehud Kamar, The Myth of State Competition in Corporate Law, 55 Stan. L. Rev. 679 (2002). (706) Daniel R. Fischel, Market Evidence in Corporate Law, 69 U. Chi. L. Rev. 941 (2002). (707) Lucian Arye Bebchuk & Assaf Hamdani, Vigorous Race or Leisurely Walk: Reconsidering the Competition over Corporate Charters, 112 Yale L.J. 553 (2002).

(b) Price Discrimination

(708) Marcel Kahan & Ehud Kamar, Price Discrimination in the Market for Corporate Law, 86 Cornell L. Rev. 1205 (2001).

See supra section (I)(F)(3).

(9) Mobility in the Charter Market

(a) Home State Bias

(709) Demetrios G. Kaouris, Is Delaware Still a Haven for Incorporation?, 20 Del. J. Corp. L. 965 (1995).

51 (710) Robert Daines, The Incorporation Choices of !PO Firms, 77 N.Y.U.L. Rev. 1559 (Dec., 2002). (711) Lucian Bebchuk & Alma Cohen, Firms' Decisions Where to Incorporate, 46 J.L. & Econ. 383 (2003).

(b) Herd Behavior

(712) Simon Deakin, Evolution for Our Time: A Theory ofLegal Memetics, in 55 CURRENT LEGAL PROBLEMS 1 (M.D.A. Freeman eds., Oxford: 2003).

(10) Moral & Cultural Dimensions

(713) Paul P. Harbrecht, Company Law Revision: A Synthesis of Opinion: The Equity of Equities, 40 U. Det. L.J. 439 (1962-1963). (714) Richard H. McAdams, An Attitudinal Theory of Expressive Law, 79 Or. L. Rev. 339 (2000) (715) Amir N. Licht, The Mother of All Path Dependencies: Toward a Cross-Cultural Theory ofCorporate Governance Systems, 26 Del. J. Corp. L. 147 (2001). (716) Robert C. Ellickson, The Market for Social Norms, 3 Am. L. & Econ. Rev. 1 (2001) (717) Jeswald W. Salacuse, Corporate Governance, Culture and Convergence: Corporations American Style or with a European Touch?, 14 Eur. Bus. L. Rev. (EBLR) 471 (2003). (718) David Kershaw, Lost in Translation: Corporate Opportunities in Comparative Perspective, 25 Oxf. J. L. Stud. 603 (Winter 2005). (719) Demetra Arsalidou & Margaret Wang, Difficulties with Enforcing Western Standards ofCorporate Governance in Asia, 16 Eur. Bus. L. Rev. (EBLR) 329 (2005).

F. Empirical Studies on Shareholders' Wealth

(1) Models

(720) Alfred F. Conard, The Corporate Census: A Preliminary Exploration, 63 Calif. L. Rev. 440 (1975) reprinted in CORPORATIONS IN PERSPECTIVE, 94 (Alfred Conard ed.) (1976).

52 (721) Merritt B. Fox, The Role of the Market Model in Corporate Law Analysis: A Comment on Weiss and White, 76 Calif. L. Rev. 1015 (Oct., 1998) (722) Sanjai Bhagat & Roberta Romano, Event Studies and the Law - Part I: Technique and Corporate Litigation, 4 Arn. L. & Econ. Rev. 141 (Jan., 2002). (723) Sanjai Bhagat & Roberta Romano, Event Studies and the Law: Part II - Empirical Studies ofCorporate Law, 4 Arn. L. & Econ. Rev. 380 (2002). (724) Lynn A. Stout, Share Price as a Poor Criterion for Good Corporate Law, 3 Berkeley Bus. L.J. 43 (2005-2006) (725) Caspar Rose, The Challenges of Quantifying Investor Protection in a Comparative Context, 8 Eur. Bus. Org. L. Rev. (EBOR) 369 (Sept., 2007).

(2) State Competition

(726) Robert Daines, Does Delaware Law Improve Firm Value? 62 J. Fin. Econ. 525 (2001). (727) Robert Daines & Michael Klausner, Do !PO Charters Maximize Firm Value? Antitakeover Provisions in JPOs, 2001 J. Law Econ. & Org. 17 (2001). (728) Robert Daines, The Incorporation Choices of !PO Firms, 77 N.Y.U.L. Rev. 1559 (Dec., 2002). (729) Guhan Subramanian, The Disappearing Delaware Effect, 20 J. L. Econ. & Org. 32 (2004). (730) Stephen P. Ferris, Robert M. Lawless, & Gregory Noronha, The Influence of State Legal Environments on Firm Incorporation Decisions and Values, 2 J. L. Econ. & Pol. 1 (2006).

(3) Reincorporation Effects

(731) Allen Hyman, The Delaware Controversy - The Legal Debate, 4 Del. J. Corp. L. 368 (1978-1979). (732) Peter Dodd & Richard Leftwich, The Market for Corporate Charters: "Unhealthy Competition" Versus Federal Regulation, 53 J. Bus. 259 (1980). (733) Roberta Romano, Law as a Product: Some Pieces of the Incorporation Puzzle, 1 J.L. Econ. & Org. 225 (Autumn, 1985). (734) SHARON PAMEPINTO, REINCORPORATION: 1988 BACKGROUND REPORT (Investor Responsibility Research Center Report, 1988). (735) Pamela Peterson, Reincorporation: Motives and Shareholder Wealth, 23 Fin. Rev. 151 (May 1988).

53 (736) Randall A. Heron & Wilbur G. Lewellen, An Empirical Analysis of the Reincorporation Decision, 33 J. Fin. & Q. Anal. 549 (Dec., 1998). (737) Edward M. Iacobucci, Toward a Signaling Explanation of the Private Choice of Corporate Law, 6 Am. L. & Econ. Rev. 319 (2004). (738) Zsuzsanna Fluck & Colin Mayer, Does Corporate Mobility Enhance Corporate Governance?, in European Economic Integration and South-East Europe: Challenges and Prospects (Klaus Liebscher, Josef Christ}, Peter Mooslechner & Doris Ritzberger- Grilnwald eds.) (Edward Elgar Publishing 2005). (739) Zsuzsanna Fluck & Colin Mayer, Race to the Top or Bottom? Corporate Governance, Freedom ofReincorporation and Competition in Law, 1 Ann. Fin. 349 (2005). (740) Marco Becht, Colin Mayer, & Hannes Wagner, Where Do Firms Incorporate? Deregulation and the Cost ofEntry (ECGI - Law Working Paper No. 70/2006, 2006) available at .

(4) Delaware Judicial Decisions' Role

(741) Elliott J. Weiss & Lawrence J. White, Of Econometrics and Indeterminacy: A Study ofInvestors' Reactions to "Changes" in Corporate Law, 75 Cal. L. Rev. 551 (1987) (742) Sreenivas Kama, Joseph Weintrop & Peggy Wier, Investors Perceptions of the Delaware Supreme Court Court Decision in Unocal vs. Mesa, 20 J. Fin. Econ. 419-30 (Jan./Mar. 1988). (743) Merritt B. Fox, The Role of the Market Model in Corporate Law Analysis: A Comment on Weiss and White, 76 Calif. L. Rev. 1015 (Oct., 1988). (744) Elliott J. Weiss & Lawrence J. White, A Response to Professor Fox, 76 Calif. L. Rev. 1047 (Oct., 1988).

(5) Takeover Market's Role

(745) Gregg A. Jarrell & Michael Bradley, The Economic Effects of Federal and State Regulations of Cash Tender Offers, 23 J.L. & Econ. 371 (1980). (746) Gregg A. Jarrell & Annette B. Poulsen, Shark Repellents and Stock Prices: The Effects ofAntitakeover Amendments since 1980, 19 J. Fin. Econ. 127 (1987). (747) Gregg A. Jarrell, James A. Brickley & Jeffry M. Netter, The Market for Corporate Control: The Empirical Evidence Since 1980, 2 J. Econ. Pers. 49 (Winter, 1988). (748) Sreenivas Kamma, Joseph Weintrop & Peggy Wier, Investors' Perceptions of the Delaware Supreme Court Decision in Unocal v. Mesa, 20 J. Fin. Econ. 419 (1988).

54 (749) Michael Ryngaert & Jeffry M. Netter, Shareholder Wealth Effects of the Ohio Antitakeover Law, 4 J.L. Econ. & Org. 373 (1988) (750) Paul H. Malatesta & Ralph A. Walkling,. Poison Pill Securities, 20 J. Fin. Econ. 347 (1988) (751) Laurence Schumann, State Regulation of Takeovers and Shareholder Wealth: The Case ofNew York's 1985 Takeover Statutes, 19 Rand J. Econ. 557 (1988) (752) Jo Watson Hackl & Rosa Anna Testani, Second Generation State Takeover Statutes and Shareholder Wealth: An Empirical Study, 97 Yale. L. J. 1193 (May, 1988) (753) Dosoung Choi, Sreenivas Kamma & Joseph Weintrop, The Delaware Courts, Poison Pill, and Shareholder Wealth, 5 J. L. Econ. & Org. 375 (Autumn, 1989). (754) Donald G. Margotta, Thomas P. Mc Williams & Victoria B. Mc Williams, An Analysis of the Stock Price Effect of the 1986 Ohio Takeover Legislation, 6 J.L. Econ. & Org. 235 (Spring, 1990) (755) Michael Ryngaert & Jeffry M. Netter, Shareholder Wealth Effects of the I 986 Ohio Antitakeover Law Revisited: Its Real Effects, 6 J.L. Econ. & Org. 253 (Spring, 1990) (756) John S. Jahera, Jr. & William Pugh, State Takeover Legislation: The Case of Delaware, 7 J.L. Econ. & Org. 410 (Autumn, 1991) (757) Samuel H. Szewczyk & George P. Tsetsekos, State Intervention in the Market for Corporate Control: The Case of Pennsylvania Senate Bill 1310, 31 J. Fin. Econ. 3 (1992) (758) Guhan Subramanian, The Influence ofAntitakeover Statutes on Incorporation Choice: Evidence on the "Race" Debate and Antitakeover Overreaching, 150 U. Pa. L. Rev. 1795 (2002). (759) Lucian Arye Bebchuk & Alma Cohen, Firms' Decisions Where to Incorporate, 46 J.L. & Econ. 383 (2003).

III. Federalization of the Corporate Law

A. The Extent of Congressional Authority

(760) Ernest W. Huffcut, Constitutional Aspects of the Federal Control of Corporations, 34 Am. L. Rev. 186 (1900). (761) John B. Sanborn, Federal Control a/Corporations, 37 Am. L. Rev. 703 (1903). (762) Carman F. Randolph, Considerations on the State Corporation in Federal and Interstate Relations: The Northern Securities Cases: Part 1-111, 3 Colum. L. Rev. 168, 221, 305 (1903). (763) H. W. Chaplin, National Incorporation, 5 Colum. L. Rev. 415 (1905).

55 (764) Ezra Parmalee Prentice, Congress and the Regulation of Corporations, 19 Harv. L. Rev. 168 (1906). (765) Frederic R. Coudert, Constitutional Limitations on the Regulation of Corporations, 6 Colum. L. Rev. 485 (1906). (766) Chauncey J. Hamlin, Power of Congress to Regulate Corporations, 5 (The) Brief 346 (1905); 6 (The) Brief 14 (1906). (767) EZRA PARMALEE PRENTICE, THE FEDERAL POWER OVER CARRIERS AND CORPORATIONS (The Macmillan Company, New York; Jan., 1907). (768) Sydney D. Moore Hudson, Federal Incorporation: The Power ofCongress to Charter Interstate Commerce Corporations, 26 Pol. Sci. Q. 63 (Mar., 1911) (769) Sidney D. Moore Hudson, The Power of Congress to Charter Interstate Commerce Corporations, in SOCIAL REFORM AND THE CONSTITUTION (Frank Johnson Goodnow eds., Washington, D.C.: 1911). (770) Victor Morawetz, Power of Congress to Enact Incorporation Laws and to Regulate Corporations, 26 Harv. L. Rev. 667 (1912-1913). (771) Myron W. Watkins, Federal Incorporation I - III, 17 Mich. L. Rev. 64, 145, 238 (1918-1919). (772) Richard S. Harvey, Nature and Extent of Power to Create Federal Corporations, 8 Geo. L. J. 23 (1920). (773) James J. Robbins, Federal Licensing of Business Corporations, 13 Tul. L. Rev. 214 (1939). (774) Pierce O'Donnell, Federal Chartering of Corporations: Constitutional Challenges, 61 GEO. L. J. 123 (1972). (775) Legislative Foreword: Michael A. Perino, Fraud and Federalism: Preempting Private State Securities Fraud Causes ofAction, 50 Stan. L. Rev. 273 (Jan., 1998). (776) Manning Gilbert Warren, III, Federalism and Investor Protection: Constitutional Restraints on Preemption of State Remedies for Securities Fraud, 60 L. & Contemp. Probs. 169 (Summer, 1997). (777) Robert B. Thompson, Preemption and Federalism in Corporate Governance: Protecting Shareholder Rights to Vote, Sell, and Sue, 62 Law & Contemp. Probs. 215 (Summer 1999).

B. Federalization Movements

(1) Congressional Movements

56 (778) FEDERAL TRADE COMMISSION, COMPILATION OF PROPOSALS AND VIEWS FOR AND AGAINST INCORPORATION AND LICENSING OF CORPORATIONS, S. Doc. No. 92, 70th Cong., 1st Sess., pt. 69-A (1934). (779) S.l 0, 75th Cong., 1st Sess. (1937). (780) S. 3072, 75th Cong., 3d Sess. (1938). (781) S. 330, 76th Cong., 1st Sess. (1939). (782) HEARINGS BEFORE THE COMMITTEE ON COMMERCE, U.S. SENATE, 94th Cong., 2d. Sess. (1976) (783) PROTECTION OF SHAREHOLDERS RIGHTS ACT OF 1980: HEARINGS ON S. 2567 BEFORE THE SUBCOMM. ON SECURITIES OF THE SENATE COMM. ON BANKING, HOUSING AND URBAN AFFAIRS, 96th Cong., 2d Sess. (1980); Corporate Rights and Responsibilities: Hearings Before Senate Comm. on Commerce, 94th Cong., 2d Sess. (1976).

(2) Harmonization Proposals

(784) John C. Richberg, Harmonious Incorporation Legislation, 39 Nat. Corp. Rep. 807 (1910). (785) Robert S. Stevens, Uniform Corporation Laws through Interstate Compacts and Federal Legislation, 34 Mich. L. Rev. 1063 (Jun., 1936)

(3) Federalization Proposals

(786) Walter S. Logan, National Incorporation and Control of Corporations, 11 Am. Law. 61 (Feb., 1903). (787) Horace L. Wilgus, A Proposed National Incorporation Law, 2 Mich. L. Rev. 501 (1904). (788) Linda C. Quinn, Federal Chartering of Corporations: A Proposal, 61 Geo. L.J. 89 (1972) (789) William L. Cary, Federalism and Corporate Law: Reflections upon Delaware, 83 Yale L.J. 663 (1973-1974). (790) Donald E. Schwartz, A Case for Federal Chartering of Corporations, 31 Bus. Law. 1125 (1976). (791) RALPH NADER, MARK GREEN, E. JOEL SELIGMAN, CONSTITUTIONALIZING THE CORPORATION: THE CASE FOR THE FEDERAL CHARTERING OF GIANT CORPORATIONS (1976). (792) Christopher J. Brogan, Fairness in Going Private Transaction: Federal Authorization ofSubstantive Regulation, 58 B.U. L. Rev. 792 (1978).

57 (793) Note, Indemnification ofDirectors in a Federal Chartering System, 1979 Wash. U. L. Q. 523 (1979). (794) Howard M. Metzenbaum, Legislative Approaches to Corporate Governance, 56 Notre Dame L. 926 (1980-1981). (795) Marvin A. Chirelstein, Towards a Federal Fiduciary Standards Act, 30 Clev. St. L. Rev. 203 (1981). (796) Elliott J. Weiss, A Proposal for a Federal Takeover Law, 9 Cardozo L. Rev. 1699 (1987-1988). (797) Joel Seligman, The New Corporate Law, 59 Brook. L. Rev. 1 (1993). (798) Michael Ryngaert, An Appropriate Federal Role in the Market for Corporate Control, 5 J. App. Corp. Fin. 44 (Jan., 1993) (799) Lucian Arye Bebchuk & Allen Ferrell, On Takeover Law and Regulatory Competition, 57 Bus. L. 1047 (2002). (800) Steven A. Ramirez, The End of Corporate Governance Law: Optimizing Regulatory Structures for a Race to the Top, 24 Yale J. on Reg. 313 (Summer, 2007).

(4) Federal Expansion in Corporate Law

(801) George D. Hornstein, New Forum for Stockholders, 45 Colum. L. Rev. 35 (1945). (802) Hemy J. Friendly, In Praise of Erie - and of the New Federal Common Law, 39 N.Y.U.L. Rev. 383 (1964). (803) David S. Ruder, Pitfalls in the Development of a Federal Law of Corporations by Implication Through Rule JOb-5, 59 Nw. U. L. Rev. 185 (1964). (804) Arthur Fleischer, Jr., "Federal Corporation Law": An Assessment, 78 Harv. L. Rev. 1146 (1965). (805) Manuel F. Cohen, Federal Corporation Law, 20 J. Legal Ed. 529 (1968). (806) Comment, Schoenbaum v. Firstbrook: The "New Fraud" Expands Federal Corporation Law, 55 Va. L. Rev. 1103 (Oct., 1969). (807) Lewis D. Lowenfels, Recent Supreme Court Decisions Under the Federal Securities Laws: The Pendulum Swings, 65 Geo. L.J. 891 (1977). (808) Alphonse A. Sommer, Jr, The Impact of the SEC on Corporate Governance, 41 Law & Contemp. Probs. 115 (Summer, 1977). (809) Joel Seligman, The Securities and Exchange Commission and Corporate Democracy, 3 U. Dayton L. Rev. 1 (1978) (810) ROBERTA S. KARMEL, REGULATION BY PROSECUTION - THE SECURITIES AND EXCHANGE COMMISSION VERSUS CORPORATE AMERICA (New York: Simon and Schuster, 1982).

58 (811) Joel Seligman, The New Corporate Law, 59 Brook. L. Rev. I (1993). (812) Patrick Moyer, The Regulation of Corporate Law by Securities Regulators: A Comparison of Ontario and the United States, 55 U.T. Fae. L. Rev. 43 (Winter, 1997). (813) Robert B. Thompson & Hillary A. Sale, Securities Fraud as Corporate Governance, Reflections Upon Federalism, 56 Vand. L. Rev. 859 (2003). (814) Roberta S. Karmel, The Securities and Exchange Commission Goes Abroad to Regulate Corporate Governance, 33 Stetson L. Rev. 849 (2003-2004). (815) Jill E. Fisch, The New Federal Regulation of Corporate Governance, 28 Harv. J.L. & Pub. Pol'y 39 (Fall, 2004). (816) Joel Seligman, Self-Funding for the Securities and Exchange Commission, 28 Nova L. Rev. 233 (2004). (817) Joel Seligman, A Modest Revolution in Corporate Governance, 80 Notre Dame L. Rev. 1159 (2004-2005) (818) Roberta S. Karmel, Realizing the Dream of William O.Douglas - The Securities and Exchange Commission Takes Charge of Corporate Governance, 30 Del. J. Corp. L. 79 (2005). (819) Joan MacLeod Heminway, Rock, Paper, Scissors: Choosing the Right Vehicle for Federal Corporate Governance Initiatives, 10 Fordham J. Corp. & Fin. L. 225 (2005). (820) Donald C. Langevoort, The SEC as a Lawmaker: Choices about Investor Protection in the Face of Uncertainty, 84 Wash. U. L. Rev. 1591 (2006). (821) Shane de Burca, Principled Regulation: How the UK. 's Financial Services Authority Successfully Differentiated itselffrom US. Regulators, The Deal Newsweekly (May 21, 2007) available at .

C. Views on the Federalization of the Corporate Law

(1) Calls for Further Assessment of the Federalization

(822) Ernest W. Huffcut, Constitutional Aspects ofthe Federal Control of Corporations, 34 AM. L. REV. 186 (1902). (823) Herbert Knox Smith, Incorporation by the States, 14 Yale L. J. 385 (1905). (824) Eugene E. Prussing, Corporate Reforms, 40 Chic. Leg. N. 86 (1907).

59 (2) Support for Federalization

(825) James B. Dill, National Incorporation Laws for Trusts, 6 Yale L. J. 273 (Apr., 1902). (826) Henry W. Palmer, Federal Incorporation for Companies Engaged in Interstate Commerce, 27 Nat. Corp. Rep. 376 (1903) reprinted in 11 Am. Law. 61 (1903). (827) Horace La Fayette Wilgus, Need ofNational Incorporation Law, 2 Mich. L. Rev. 358 (1904). (828) Horace L. Wilgus, Need of a National Incorporations Law, 2 Mich. L. Rev. 358 (1904) (829) Horace La Fayette Wilgus, Should There Be a Federal Incorporation Law for Commercial Corporations, 27 Rep. A. B. A. 694 (1904). (830) Horace La Fayette Wilgus, Federal License or National Incorporation, 3 Mich. L. Rev. 264 (1905). (831) H. W. Chaplin, National Incorporation, 5 Colum. L. Rev. 415 (June, 1905). (832) William J. Curtis, Federal Control of Corporations - A Public Necessity, 17 Green Bag 138 (1905). (833) Thomas Thacher, Corporations and the States, 17 Yale L. J. 98 (1907). (834) Harris Berlack, Federal Incorporation and Securities Regulation, 49 Harv. L. Rev. 396 (1935-1936). (835) John W. Brabner-Smith, Federal Incorporation of Business, 24 Va. L. Rev. 159 (1937). (836) Harold G. Reuschlein, Federalization - Design for Corporate Reform in a National Economy, 91 U. Pa. L. Rev. 91 (1942). (837) HAROLD GILL R.EUSCHLEIN, THE SCHOOLS OF CORPORATE REFORM (Pittsburgh, Pa.: University of Pittsburgh Press, 1950). (838) Stanley A. Kaplan, Foreign Corporations and Local Corporate Policy, 21 Vand. L. Rev. 433 (1968). (839) Joel F. Henning, Federal Corporate Chartering for Big Business: An Idea Whose Time Has Come, 21 DePaul L. Rev. 915 (1971-1972). (840) William L. Cary, A Proposed Federal Corporate Minimum Standards Act, 29 Bus. Law. 1101 (1973-1974) (841) Stanley A. Kaplan, Fiduciary Responsibility in the Management of the Corporation, 31 Bus. Law. 883 (1976). (842) Richard W. Jennings, Federalization of Corporation Law: Part Way or All the Way, 31 Bus. Law. 991 (1976) (843) RALPH c. FERRARA & MARC B. GOLDFUS, EVERYTHING You EVER WANTED TO KNOW ABOUT THE FUTURE OF FEDERAL INFLUENCE IN CORPORA TE GOVERNANCE (Financial, Government & Public Affairs; July, 1979).

60 (844) David Charny, Competition among Jurisdictions in Formulating Corporate Law Rules: An American Perspective on the "Race to the Bottom" in the European Communities, 32 Harv. Int'l. L.J. 423 (1991). (845) Roberta S. Karmel, Is It Time for a Federal Corporation Law, 57 Brook. L. Rev. 55 (1991-1992). (846) Lucian Arye Bebchuk & Allen Ferrell, Federal Intervention to Enhance Shareholder Choice, 87 Va. L. Rev. 993 (2001).

(3) Support for a Limited Federal Interference

(847) Donald E. Schwartz, Federal Chartering of Corporations: An Introduction, 61 Geo. L. J. 71 (1972-1973). (848) Donald E. Schwartz, Federalism and Corporate Governance, 45 Ohio St. L.J. 545 (1984). (849) Donald E. Schwartz, Federal Chartering Revisited, 22 U. Mich. J.L. Ref. 7 (1988- 1989). (850) Joel Seligman, The Case for Minimum Corporate Law Standards, 49 MD. L. Rev. 947 (1990). (851) Gordon G. Young, Federal Corporate Law, Federalism, and the Federal Courts, 41 Law & Contemp. Probs. 146 (Summer, 1977).

(4) Opposition to Federalization

(852) Thomas Thacher, Federal Control ofCorporations, 14 Yale L. J. 301 (1905). (853) John E. Parsons, Federal Regulation of Corporations - A Dangerous Departure, 17 Green Bag 135 (1905). (854) EZRA PARMA LEE PRENTICE, THE FEDERAL POWER OVER CARRIERS AND CORPORATIONS (The Macmillan Company, New York; Jan., 1907). (855) Edward G. Jennings, Federal Incorporation or Licensing of Interstate Corporate Business, 23 Minn. L. Rev. 710 (1938-1939). (856) Seymour J. Rubin, Corporations and Society: The Remedy of Federal and International Incorporation, 23 Am. U. L. Rev. 263 (1969). (857) Peter Aranson, Federal Chartering of Corporations: An Idea Worth Forgetting, 8 Bus. & Soc. Rev. 59 (1974). (858) David A. Drexler, Federalism and Corporate Law: A Misguided Missile, 3 Sec. Reg. J. 374 (1976).

61 (859) Joel F. Henning, Federalism and Corporate Law: The Chaos Inherent in the Cary Proposal, 3 Sec. Reg. L. J. 362 (1976). (860) Bayless Manning, Thinking Straight about Corporate Law Reform, 41 Law & Contemp. Probs. 3 (Summer, 1977). (861) Stephen J. Choi & Andrew Guzman, Choice and Federal Intervention in Corporate Law, 87 Va. L. Rev. 961 (2001). (862) Larry E. Ribstein, Market vs. Regulatory Responses to Corporate Fraud: A Critique ofthe Sarbanes-Oxley Act of 2002, 28 J. CORP. L. 1, 2 (2002) (863) Jonathan R. Macey, Displacing Delaware: Can The Feds Do A Better Job Than The States In Regulating Takeovers?, 57 Bus. Law. 1025 (May, 2002). (864) Stephen M. Bainbridge, The Creeping Federalization of Corporate Law, 26 REG. 26 (Spring 2003). (865) E. Norman Veasey, Musings on the Dynamics of Corporate Governance Issues, Director Liability Concerns, Corporate Control Transactions, Ethics, and Federalism, 152 U. Pa. L. Rev. 1007 (2003). (866) E. Norman Veasey, Musings from the Center of the Corporate Universe, 7 Del. L. Rev. 163 (2004). (867) William B. Chandler III & Leo E. Strine, Jr., The New Federalism of the American Corporate Governance System: Preliminary Reflections of Two Residents of One Small State, 152 U. Pa. L. Rev. 953 (2003). (868) Roberta Romano, Is Regulatory Competition a Problem or Irrelevant for Corporate Governance?, 21 Ox. Rev. Econ. Pol. 212 (2005). (869) Roberta Romano, The Sarbanes-Oxley Act and the Making of Quack Corporate Governance, 114 Yale L.J. 1521 (2005). (870) Leo E. Strine, Jr., The Delaware Way: How We Do Corporate Law and Some of the New Challenges We (and Europe) Face, 30 Del. J. Corp. L. 673 (2005). (871) HENRY N. BUTLER & LARRY E. RIBSTEIN, THE SARBANES-OXLEY DEBACLE: WHAT WE'VE LEARNED; How TO FIX IT (AEI Press, 2006). (872) Jeffrey Y. Wu, Revisiting Business Roundtable and Section 19(c) in the Wake of the Sarbanes-Oxley Act, 23 Yale J. on Reg. 249 (Summer, 2006).

(5) Intermediate Assessments

(873) Proceedings, The Airlie House Symposium, An In-Depth Analysis of the Federal and State Roles in Regulating Corporate Management, 31 Bus. L. 863 (1976). (874) Symposium, Federalism Issues in Corporate Governance, 45 Ohio St. L.J. 591 (1984).

62 IV. COMPARATIVE LAW

A. European Union

(1) Corporate Governance: The European Union vs. the United States

(875) Paul Leleux, Corporation Law in the United States and in the E.E.C., 5 Comm. Mar. L. Rev. (CMLR) 133 (1967-68). (876) RICHARD M. BUXBAUM & KLAUS J. HOPT, LEGAL HARMONIZATION AND THE BUSINESS ENTERPRISE, HARMONIZATION POLICY IN EUROPE AND THE U.S.A. (De Gruyter, Berlin/New York: 1988). (877) Christian Meier-Schatz, American Legal Harmonization from a European Perspective, in EUROPEAN BUSINESS LA w: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION, 61 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991). (878) Gerard Hertig, Corporate Governance in the United States as Seen from Europe, 1998 Colum. Bus. L. Rev. 27 (1998). (879) Harm-Jan de Kluiver, Disparities and Similarities in European and American Company Law: What about Living Apart Together?, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 287 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995).

(2) Governance of the European Corporate Governance

(a) European Union Federalism

(880) Hartmut Schmidt, Economic Analysis of the Allocation of Regulatory Competence in the European Communities, in EUROPEAN BUSINESS LA w: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION, 51 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991 ). (881) GEOFFREY DENTON, FEDERALISM AND EUROPEAN UNION AFTER MAASTRICHT, Wilton Park Papers, No. 67 (HMSO; Jan., 1993).

(b) Subsidiarity

63 (882) Nicholas Emiliou, Subsidiarity: An Effective Barrier Against "The Enterprises of Ambition"?, Eur. L. Rev. 383 (1992). (883) R. Van den Bergh, The Subsidiarity Principle in European Community Law: Some Insights from Law and Economics, 1 Maastricht J. Euro. & Comp. L. 337 (1994).

(884) Geoffrey Fitchew, Political Choices, in EUROPEAN BUSINESS LAW: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION, 1 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991). (885) John W. Cioffi, Restructuring "Germany Inc.": The Politics of Company and Takeover Law Reform in Germany and the European Union, 24 L. & Pol. 355 (Oct., 2002).

(3) Corporate-Law Production in the European Union

(a) Regulatory Competition

(886) Clark D. Stith, Federalism and Company Law: A "Race to the Bottom" in the European Community, 79 Geo. L.J. 1581 (1990-1991 ). (887) Ruben Lee, Legal Foundation for Competition in EC Capital Markets: The Gap between Rhetoric and Reality, 14 Int. Rev. L. & Econ. 163 (June, 1994). (888) Jeanne-Mey Sun & Jacques Pelkmans, Regulatory Competition in the Single Market, 33 J. Comm. Mkt. Studs. (JCMS) 67 (1995). (889) Frank Easterbrook, Federal and European Business Law, 14 Int'! Rev. L. & Econ. 125 (1994) (longer version is reprinted, in EUROPEAN ECONOMIC AND BUSINESS LA w: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION 1 (Richard M. Buxbaum, Gerard Hertig, Alain Hirsch & Klaus J. Hopt, eds.: 1996). (890) Stephen Woolcock, Competition among Rules in the Single European Market, in INTERNATIONAL REGULATORY COMPETITION AND COORDINATION: PERSPECTIVES ON ECONOMIC REGULATION IN EUROPE AND THE UNITED STATES 289 (Joseph McCahery, William W. Bratton, Sol Picciotto & Colin Scott eds., New York: 1997). (891) Jan Wouters, European Company Law: Quo Vadis?, 37 Com. Mar. L. Rev. (CMLR) 257 (2000).

64 (892) Catherine Barnard, Regulating Competitive Federalism, in the European Union? The Case ofEU Social Policy, in J Shaw (ed), SOCIAL LAW AND POLICY IN AN EVOLVING EUROPEAN UNION (Oxford, 2000). (893) Roger Van Den Bergh, Towards an Institutional Legal Framework for Regulatory Competition in Europe, 53 Kyklos 435 (Nov., 2000). (894) Daniel C. Esty, European Communities, Regulatory Competition in Focus, 3 J. Int'l Econ. L. 215 (Jun. 2000). (895) Gerard Hertig, Regulatory Competition for EU Financial Services, 3 J. Int'l Econ. L. 349 (2000). (896) William W. Bratton & Joseph McCahery, Fiscal Federalism, Jurisdictional Competition and Tax Coordination: Translating Theory to Policy in the European Union, 38 Comm. Mrkt. L. Rev. 677 (2001). (897) Harald Halbhuber, National Doctrinal Structures and European Company Law, 38 Comm. Mar. L. Rev. (CMLR) 1391 (2001). (898) Jan Wouters, Private International Law and Companies' Freedom of Establishment, 2 Eur. Bus. Org. Rev. (EBOR) 101 (2001). (899) Simon Deakin, Regulatory Competition versus Harmonization in European Company Law, in REGULATORY COMPETITION AND ECONOMIC INTEGRATION: COMPARATIVE PERSPECTIVE, 190 (Daniel C. Esty & Damien Geradin eds.) (Oxford University Press; Feb., 2001). (900) Simon Deakin, Regulatory Competition versus Harmonization in European Company Law, in REGULATORY COMPETITION AND ECONOMIC INTEGRATION: COMPARATIVE PERSPECTIVES (INTERNATIONAL ECONOMIC LA w) 196 (Daniel c. Esty & Damien Geradin eds., Oxford/New York 2001). (901) Klaus Heine & Wolfgang Kerber, European Corporate Laws, Regulatory Competition and Path Dependence, 13 Eur. J. L. & Econ. 47 (Jan. 2002). (902) STEFANO LOMBARDO, REGULATORY COMPETITION IN COMPANY LAW IN THE EUROPEAN COMMUNITY. PREREQUISITES AND LIMITS (Peter Lang Verlag, 2002). (903) Martin Lodge, Varieties of Europeanisation and the National Regulatory State, 17 Pub. Pol. & Adm. 43 (Apr., 2002). (904) Dan Prentice, The Incorporation Theory- The United Kingdom, 14 Eur. Bus. L. Rev. (EBLR) 631 (2003). (905) Discussion Section, Inter-state Competition in Corporate Structures, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 133 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (906) Matthias Baudisch, From Status to Contract? An American Perspective on Recent Developments in European Company Law, in THE EUROPEAN UNION AND GOVERNANCE 23, 54 (Francis Snyder ed., 2003).

65 (907) Joseph McCahery & Gerard A. Hertig, Company and Takeover Law Reforms in Europe: Misguided Harmonization Efforts or Regulatory Competition?, 4 Eur. Bus. Org. L. Rev. (EBOR) 179 (2003). (908) Mette Neville, Nordic Company Law Reforms in an International Regulatory Perspective, in THE REGULATION OF COMPANIES: A TRIBUTE TO PAUL KRUGER ANDERSEN, 111 (Mette Neville & Karsten Engsig S0rensen eds.) (Forlaget Thomson A/S; 2003). (909) Luca Enriques, EC Company Law and the Fears of a European Delaware, 15 Eur. Bus. L. Rev. (EBLR) 1259 (2004). (910) Adriaan F.M. Dorresteijn, Xenophobia or Competition?, 1 Eur. Co. L. 152 (2004). (911) Gerard A. Hertig, Efficient Fostering of EU Regulatory Competition, 76 Schweizerische Zeitschrift fur Wirtschaftsrecht (SZW) 369 (2004). (912) Joseph McCahery & Gerard A. Hertig, An Agenda for Reform: Company and Takeover Law in Europe, in REFORMING COMPANY AND TAKEOVER LAW IN EUROPE 21 (Ferrarini/Hopt/Winter/Wymeersch (eds.)) (Oxford: Oxford University Press, 2004). (913) CHRISTOPH KNILL & SUSANNE MINGERS, RINGING THE CHANGES IN EUROPE: REGULATORY COMPETITION AND REDEFINITION OF THE STATE: BRITAIN, FRANCE, GERMANY (De Gruyter; 2004).

(914) Robert Drury, A European Look at the American Experience of the Delaware Syndrome, 5 Int'l Corp. L. Ann. 1 (Apr. 2005). (915) Martin Gelter, The Structure ofRegulatory Competition in European Corporate Law, 5 J. Corp. L. Stud. 247 (2005). (916) Gerhard Wagner, The Virtues of Diversity in European Private Law, in THE NEED FOR A EUROPEAN CONTRACT LAW: EMPIRICAL AND LEGAL PERSPECTIVES, 3 (J. M. Smits ed.) (Europa Publishing; 2005). (917) Carsten Frost, Transfer of Company's Seat - An Unfolding Story in Europe, 36 Viet. Uni. Well. L. Rev. (VUWLR) 359 (2005). (918) Martina Sever, Company Mobility within the EC: Cross-Border Transfer of the Real Seat of a Company (2005) (LL.M. Thesis, Leiden University) available at (919) Joseph A. McCahery & Erik P. M. Vermeulen, Does the European Company Prevent the 'Delaware Effect'?, 11 Eur. L. J. 785 (2005). (920) Robert R. Drury, A European Look at the American Experience of the Delaware Syndrome, 5 J. Corp. L. Stud. 1 (2005). (921) Martin Gelter, The Structure ofRegulatory Competition in European Corporate Law, 5 J. Corp. L. Stud. 247 (Oct. 2005). (922) Friedrich Kubler, A Shifting Paradigm of European Company Law, 56 Col. J. Eur. L. 219 (2005).

66 (923) Luca Enriques & Martin Gelter, Regulatory Competition in European Company Law and Creditor Protection, 7 Eur. Bus. Org. L. Rev. (EBOR) 417 (Mar., 2006). (924) Seth Chertok, Jurisdictional Competition in the European Community, 27 U. Pa. J. Int'l Econ. L. 465 (Summer, 2006). (925) Marco Ventoruzzo, "Cost-Based" And "Rules-Based" Regulatory Competition: Markets for Corporate Charters in the US. and in the E. U, 3 N.Y.U. J. L. & Bus. 91 (Fall, 2006). (926) Pierre Salmon, Political Yardstick Competition and Corporate Governance in the European Union, in INVESTOR PROTECTION IN EUROPE: CORPORA TE LA w MAKING, THE MIFID AND BEYOND, (Guido Ferrarini & Eddy Wymeersch eds.) (Nov., 2006). (927) Peer Zumbansen, Spaces and Places: A Systems Theory Approach to Regulatory Competition in European Company Law, 12 Eur. L. J. 535 (2006). (928) John Armour, Who Should Make Corporate Law? EC Legislation versus Regulatory Competition, in AFTER ENRON: IMPROVING CORPORATE LAW AND MODERNISING SECURITIES REGULATION IN EUROPE AND THE U.S., 14 (John Armour & Joseph McCahery eds.) (Hart Publishing, 2006). (929) Dennis C. Mueller, The Economics and Politics of Corporate Governance in the European Union, in INVESTOR PROTECTION IN EUROPE: CORPORA TE LA w MAKING, THE MIFID AND BEYOND, 3 (Guido Ferrarini & Eddy Wymeersch eds.) (Oxford: Oxford University Press; 2006). (930) Simon Deakin, Legal Diversity and Regulatory Competition: Which Model for Europe?, 12 Eur. L. J. 440 (2006). (931) Simon Deakin, Is Regulatory Competition the Future for European Integration?, 13 Swedish Econ. Pol. Rev. 71 (2006). (932) Luca Enriques & Martin Gelter, How the Old World Encountered the New One: Regulatory Competition and Cooperation in European Corporate and Bankruptcy Law, 81 Tul. L. Rev. 577 (February, 2007). (933) Vahagn Movsesyan, Regulatory Competition Puzzle: The European Design, (LEM Papers Series No. 2006/30, 2007), available at (934) Theodor Baums, European Company Law Beyond the 2003 Action Plan, 8 Eur. Bus. Org. L. Rev. (EBOR) 143 (March 2007). (935) Daniela Weber-Rey, Effects of the Better Regulation Approach on European Company Law and Corporate Governance, 4 Eur. Comp. & Fin. L. Rev. (ECFLR) 370 (2007). (936) Sebastian Mock, Cost-based and Rule-based Markets for Rules in Corporate Law, 4 Eur. Comp. & Fin. L. Rev. (ECFLR) 76 (2007).

(b) Company Law Harmonization

67 (937) Eric Stein, Assimilation of National Laws as a Function of European Integration, 58 Am. J. Int'l L. 1 (1964). (938) ERIC STEIN, HARMONIZATION OF EUROPEAN COMPANY LAWS: NATIONAL REFORM AND TRANSNATIONAL COORDINATION, VOL. I, II (New York, BobbsMerrill Company, 1970). (939) Clive Schmitthoff, The Future of the European Company Law Scene, in Clive Schmitthoff (ed.) THE HARMONISATION OF EUROPEAN COMPANY LAW (London: UKNCCL, 1973). (940) Detlev Vagts, Company Law Harmonization in the European Community, in EMERGING STANDARDS OF INTERNATIONAL TRADE AND INVESTMENT: MULTINATIONAL CODES AND CORPORATE CONDUCT 17 (Seymour J. Rubin & Gary Clyde Hufbauer eds. 1982). (941) RICHARD M. BUXBAUM & KLAUS J. HOPT, LEGAL HARMONIZATION AND THE BUSINESS ENTERPRISE. CORPORA TE AND CAPITAL MARKET LAW HARMONIZATION POLICY IN EUROPE AND THE U.S.A. (Berlin/New York, De Gruyter, 1988). (942) Janet Dine, The Harmonization of Company Law in the European Community, 9 YEL 97 (1989). (943) Manning G. Warren, III, Regulatory Harmony in the European Communities: The Common Market Prospectus, 16 Brook. J. Int'l L. 9 (1990). (944) Richard M. Buxbaum & Klaus J. Hopt, Legal Harmonization and the Business Enterprise Revisited, in EUROPEAN BUSINESS LAW 391 (Richard M. Buxbaum et al. eds., Berlin/New York: 1991) (945) Alfred F. Conard, The European Alternative to Uniformity in Corporation Laws, 89 Mich. L. Rev. 2150 (1991). (946) Christiaan W. A. Timmermans, Methods and Tools for Integration, in EUROPEAN BUSINESS LAW: LEGAL AND ECONOMIC ANALYSES ON lNTEGRA TION AND HARMONIZATION, 129 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991). (947) Erik Werlauff, The Development of Community Company Law, 17 Eur. L. Rev. (ELR) 207 (1992). (948) Robert Drury, A Review of the European Community's Company Law Harmonisation Programme, 24 Bracton L. J. 45 (1992) reprinted in J. Eur. Stud. C. Uni. 1 (1997). (949) ERIK WERLAUFF, EC COMPANY LAW: THE COMMON DENOMINATOR FOR BUSINESS UNDERTAKINGS IN 12 STATES (Copenhagen, Jurist- og Okonomforbundets,1993). (950) M.J.G.C. Raaijmakers, Which Way with Company Law Harmonization, in FURTHER PERSPECTIVES IN FINANCIAL lNTEGRA TION IN EUROPE: REPORTS PRESENTED AT THE BRUSSELS MEETING OF THE INTERNATIONAL FACULTY FOR CORPORA TE MARKET 231 (Eddy Wymeersch ed., Berlin: 1994).

68 (951) Gregor C. Heinrich, Funds, Transfers, Payments, and Payments Systems-- International Initiatives Towards Legal Harmonization, 28 INT'L. LAW. 787 (Fall, 1994). (952) Cl. Lempereur, Myth and Reality in the European Harmonization Process, in FURTHER PERSPECTIVES IN FINANCIAL INTEGRATION IN EUROPE: REPORTS PRESENTED AT THE BRUSSELS MEETING OF THE INTERNATIONAL FACULTY FOR CORPORATE MARKET 241 (Eddy Wymeersch eds., Berlin: 1994). (953) J. J. Du Plessis & Janet Dine, The Fate ofthe Draft Fifth Directive on Company Law: Accommodation Instead ofHarmonisation, 1997 J. Bus. L. 23 (1997). (954) Daniela Caruso, The Missing View of the Cathedral: The Private Law Paradigm of European Legal Integration, 3 Eur. L. J. 32 (1997). (955) CHARLOTTE VILLIERS, EUROPEAN COMPANY LAW - TOWARDS DEMOCRACY? (Dartmouth & Ashgate Publishing, 1998). (956) FILIP TUYTSCHAEVER, DIFFERENTIATION IN EUROPEAN UNION LA w (Hart Publishing, 1999). (957) Michael Dougan, Minimum Harmonization and the Internal Market, 37 Comm. Mar. L. Rev. (CMLR) 853 (2000). (958) Catherine Barnard, Social Dumping Revisited: Lessons from Delaware, 25 Eur. L. Rev. 57 (2000). (959) Gunther Teubner, Legal Irritants: How Unifying Law Ends up in New Divergences, in VARIETIES OF CAPITALISM: THE INSTITUTIONAL FOUNDATIONS OF COMPARATIVE ADVANTAGE 417 (Peter Andrew Hall & David W. Soskice eds.) (2001). (960) Stephen Weatherhill, Pre-emption, Harmonisation and the Distribution of Competence to Regulate the Internal Market, in THE LAW OF THE SINGLE EUROPEAN MARKET: UNPACKING THE PREMISES, 41 (Catherine Barnard & Joanne Scott eds.) (Hart Publishing, 2002). (961) Sebastian Mock, Harmonization, Regulation and Legislative Competition in European Corporate Law, 3 German L. J. (Dec. 2002). (962) Christiaan W. A. Timmermans, Company Law as !US Commune, (Walter van Gerven Lectures - 1) (Intersentia, 2002). (963) C. Hampton, European Company Law Reforms Make Uneven Progress, 14 EuroWatch 10 (2002). (964) Robert J. Franzese, Jr. & James M .. Mosher, Comparative Institutional and Policy Advantage: The Scope for Divergence within European Economic Integration, 3 Eur. Un. Pol. 177 (2002). (965) Klaus J. Hopt, Common Principles of Corporate Governance in Europe, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 175 (Joseph McCahery ed.) (Oxford University Press; 2002).

69 (966) Discussion Section, The Value of Harmonization, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 138 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (967) Tim F. Atkins, Can National Corporate Governance Codes Sufficiently Converge to Protect Diverse Interests within the European Union? (Dec. 2003) (unpublished Masters' Thesis, on file with SSRN) available at . (968) Laurent Faugerolas, Impact of Take-overs and their Regulation on French Company Law and Practice, in CAPITAL MARKETS AND COMPANY LAW 327 (Klaus J. Hopt & Eddy Wymeersch eds.) (Oxford University Press, 2003). (969) Karel Van Hulle, Does the EU have a Role to Play in Company Law?, in THE REGULATION OF COMPANIES: A TRIBUTE TO PAUL KROGER ANDERSEN, 29 (Mette Neville & Karsten Engsig S0rensen eds.) (Forlaget Thomson A/S; 2003). (970) Uriel Procaccia & Uzi Segal, Thou Shalt Not Sow Thy Vineyard with Divers Seeds? The Case Against the Harmonization of Private Law, in CAPITAL MARKETS AND COMPANY LA w 639 (Klaus J. Hopt & Eddy Wymeersch eds.) (Oxford University Press, 2003). (971) Frits Bolkestein, The New European Company: Opportunity in Diversity, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 41 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (972) Marie-Agnes Arlt, Cecile Bervoets, Kristoffel Grechenig & Suanne Kalss, The Status of the Law on Stock Companies in Central and Eastern-Europe: Facing the Challenge to Enter the European Union and Implement European Company Law, 4 Eur. Bus. Org. L. Rev. (EBOR) 245 (Oct., 2003). (973) Alan S. Reid, The Increasing Europeanisation of Company Law, 24 Bus. L. Rev. 165 (2003) (974) Jan Andersson, The High Level Group and the Issue of European Company Law Harmonisation - Europe Stumbles Along?, in THE REGULATION OF COMPANIES: A TRIBUTE TO PAUL KROGER ANDERSEN, 183 (Mette Neville & Karsten Engsig S0rensen eds.) (Forlaget Thomson A/S; 2003). (975) Discussion Section, Themes from the Conference: The Value of Harmonization, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 133 (Jonathan Rickford eds.) (lntersentia Publishing, 2003). (976) Andras Kisfaludi, The Harmonisation of Hungarian Company Law - A Pendular Process, 5 Eur. Bus. Org. L. Rev. (EBOR) 705 (Dec., 2004). (977) Marco Becht & Colin Mayer, Corporate Governance in Europe: Competition versus Harmonization, in MARKET DISCIPLINE ACROSS COUNTRIES AND INDUSTRIES, 255 (Claudio Borro, William C. Hunter, George Kaufman & Kostas Tsatsaronis eds.) (MIT Press, 2004). (978) Hanno Merkt, European Company Law Reform: Struggling for a More Liberal Approach, 1 Eur. Co. & Fin. L. Rev. 3 (Apr. 2004).

70 (979) Katharina Pistor, Enhancing Corporate Governance in the New Member States: Does EU Law Help?, in LAW AND GOVERNANCE IN AN ENLARGED EUROPEAN UNION, 339 (George A. Bermann & Katharina Pistor eds.) (Hart Publishing, 2004). (980) BARBARA P ASA & ANTONIO BENACCHIO, THE HARMONIZATION OF CIVIL AND COMMERCIAL LAW IN EUROPE, 265 - 409 (Central European University Press, New York; 2005). (981) Mathias Siems, The Case against Harmonisation of Shareholder Rights, 6 Eur. Bus. Org. L. Rev. (EBOR) 539 (2005). (982) Joseph McCahery & Gerard A. Hertig, A Legal Options Approach to EC Company Law, in INVESTOR PROTECTION IN EUROPE: CORPORATE LAW MAKING, THE MIFID AND BEYOND, (Guido Ferrarini & Eddy Wymeersch eds.) (Nov., 2006). (983) Luca Enriques & Matteo Gatti, The Uneasy Case for Top-Down Corporate Law Harmonization in the European Union, 27 U. Pa. J. Int'I Econ. L. 939 (Winter, 2006). (984) John Birds, Reforming the United Kingdom Company Law in a European Context: a Long and Winding Road, in EUROPEAN COMP ANY LA w IN ACCELERATED PROGRESS, 9 (Steef M. Bartman ed.) (Kluwer Publications: 2006). (985) Luca Enriques, Company Law Harmonization Reconsidered: What Role for the EC?, in EUROPEAN COMPANY LA w IN ACCELERATED PROGRESS, 59 (Steef M. Bartman ed.) (Kluwer Publications: 2006). (986) Hanne S0ndergaard Birkmose, Regulatory Competition and the European Harmonisation Process, 17 Eur. Bus. L. Rev. (EBLR) 1075 (2006). (987) Bastiaan van Apeldoom & Laura Hom, The Transformation of Corporate Governance Regulation in the European Union: From Harmonization to Marketization, in THE TRANSNATIONAL POLITICS OF CORPORA TE GOVERNANCE REGULATION (Henk Overbeek, Bastiaan van Apeldoom & Andreas Nelke eds.) (Routledge: 2007).

(988) Koen Byttebier, Protective and Defensive Measures against Hostile Take-overs, in FURTHER PERSPECTIVES IN FINANCIAL lNTEGRA TION IN EUROPE, 181 (Eddy Wymeersch ed.) (Berlin-New York, 1994). (989) Gerard von Solinge, Corporate Law Aspects of Cross-Border Mergers, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 143 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (990) Jonathan R. Macey, Clas Bergstrom, Peter Hogfeldt & Per Samuelsson, The Regulation of Corporate Acquisitions: A Law and Economics Analysis of European Proposals for Reform, 1995 Col um. Bus. L. Rev. 495 (1995). (991) Yves Dezalay, Technological Warfare: The Battle to Control the Mergers and Acquisition Market in Europe, in PROFESSIONAL COMPETITION AND PROFESSIONAL

71 POWER: LA WYERS, ACCOUNTANTS AND THE SOCIAL CONSTRUCTION OF MARKETS 205 (Yves Dezalay & David Sugarman eds.) (New York: Routledge, 1995). (992) Ton Daniels, The Relevance of the EC Merger Directive of23 July 1990 in European Mergers and Reorganizations, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 91 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (993) Eddy Wymeersch, The Regulation of Takeover Bids in a Comparative Perspective, in EUROPEAN ECONOMIC AND BUSINESS LAW: LEGAL AND ECONOMIC ANALYSES ON INTEGRATION AND HARMONIZATION 291 (Richard M. Buxbaum, Gerard Hertig, Alain Hirsch & Klaus J. Hopt, eds.: 1996). (994) K. H. Baumann, Takeovers in Germany and EU Regulation: Experience and Practice, in COMPARATIVE CORPORATE GOVERNANCE, 659 (Klaus Hopt ed.) (Oxford University Press; Feb., 1999). (995) Patrick C. Leyens, European Take-overs, 12 Eur. Bus. L. Rev. (EBLR) 42 (2001). (996) Anne Funch Jensen, Cross-Border Mergers Before and After the Societas Europaea (SE), (2001) (Masters' of Law Thesis, College of Europe). (997) Klaus J. Hopt, Takeover Regulation in Europe -- The Battle for the 1ih Directive on Takeovers, 15 Aust. J. Corp. L. 2 (Nov. 2002). (998) Rolf Skog, The Takfover Directive -An Endless Saga?, 13 Eur. Bus. L. 301 (2002). (999) Julian R. Franks, Colin Mayer & Luc Renneboog, Managerial Disciplining and the Market for (Partial) Corporate Control in the UK, in CORPORATE GOVERNANCE REGIMES: CONVERGENCE AND DIVERSITY, 441 (Joseph McCahery ed.) (Oxford University Press; 2002). (1000) Gian Luca Zampa, The Role of Efficiency under the EU Merger Regulation, 4 Eur. Bus. Org. L. Rev. (EBOR) 573 (Dec., 2003). (lOOl)JOSEPH McCAHERY & Luc RENNEBOOG, THE ECONOMICS OF THE PROPOSED TAKEOVER DIRECTIVE (Centre for European Policy Studies; 2003 ). (1002) Richard Burnley, The EC Merger Regulation and the Meaning of "Community Dimension, 14 Eur. Bus. L. Rev. (EBLR) 815 (2003). (1003)Erik Berglof & Mike Burkart, European Takeover Regulation, 18 Econ. Pol. 171 (Apr., 2003). (1004) Laurent Faugerolas, Impact of Take-overs and their Regulation on French Company Law and Practice, in CAPITAL MARKETS AND COMPANY LAW 327 (Klaus J. Hopt & Eddy Wymeersch eds.) (Oxford University Press, 2003). (1005) Jan Schans Christensen, The New Draft Takeover Directive - A Breakthrough for Levelling the Playing Field in Europe?, in THE REGULATION OF COMPANIES: A TRIBUTE TO PAUL KROGER ANDERSEN, 201 (Mette Neville & Karsten Engsig S0rensen eds.) (Forlaget Thomson A/S; 2003). (I 006) Mathias M. Siems, The Rules on Conflict of Laws in the European Takeover Directive, 1 Eur. Comp. & Fin. L. Rev. (ECFLR) 458 (2004).

72 (1007) Steef Bartman, Analysis and consequences of the EC Directive on Takeover Bids, 1 Eur. Co. L. 5 (2004). (1008)Andre Nilsen, Anglo-American v. Continental-Nordic Models of Corporate Governance: The Political Economy of Takeovers in the European Union, 15 Eur. Bus. L. Rev. (EBLR) 1353 (2004). (1009)Matteo Gatti, Optionality Arrangements and Reciprocity in the European Takeover Directive, 6 Eur. Bus. Org. L. Rev. (EBOR) 553 (Dec., 2005). (1010) Jette Steen Knudsen, Is the Single European Market an Illusion? Obstacles to Reform ofEU Takeover Regulation , 11 Eur. L. J. 507 (2005). (1011) Marco Ventoruzzo, Europe's Thirteenth Directive and US. Takeover Regulation: Regulatory Means and Political and Economic Ends, 41 Tex. Int'l L.J. 171 (Spring, 2006). (1012) Michel Menjucq, The European Regime on Takeovers, 3 Eur. Comp. & Fin. L. Rev. (ECFLR) 222 (2006). (1013) Anna-Louise Hinds, The New EC Merger Regulation - The More Things Change the More They Stay the Same?, 17 Eur. Bus. L. Rev. (EBLR) 1693 (2006). (1014) Steef M. Bartman, The EC Directive on Takeover Bids: Opting in as a Token of Good Corporate Practice, in EUROPEAN COMPANY LAW IN ACCELERATED PROGRESS, 1 (SteefM. Bartman ed.) (Kluwer Publications: 2006). (1015)Marc Meyers, Luxembourg Transposes Takeover Directive Against the Backdrop of Mittal Steel's Bid for Arce/or, 3 Eur. Co. L. 261 (2006). (1016) Cedric Ryngaert, Cross-Border Takeover Regulation: a Transatlantic Perspective, 4 Eur. Bus. L. Rev. (EBOR) 434 (2007). (1017) Harald Gesell & Pieter Riemer, "Outbound" Cross-border Mergers Protected by Freedom of Establishment Annotation to the Decision of the Amsterdam District Court (Kantongerecht) 29 January 2007, EA 06-3338 166, 4 Eur. Comp. & Fin. L. Rev. (ECFLR) 308 (2007). (1018) Marco Ventoruzzo, Cross-border Mergers, Change of Applicable Corporate Laws and Protection of Dissenting Shareholders: Withdrawal Rights under Italian Law, 4 Eur. Comp. & Fin. L. Rev. (ECFLR) 47 (2007). (1019)Lone L. Hansen, Merger, Moving and Division Across National Borders - When Case Law Breaks through Barriers and Overtakes Directives, 18 Eur. Bus. L. Rev. (EBLR) 181 (2007). (1020)Marco Ventoruzzo, Takeover Regulation as Wolf in Sheep's Clothing: Taking Armour & Skeel 's Thesis to Continental Europe (Bocconi Legal Studies Research Paper, No. 2008-02, 2008).

(d) European Insolvency Forum Competition

73 (1021) Marc Lauterfeld, "Centros" and the EC Regulation on Insolvency Proceedings: The End of the "Real Seat" Approach towards Pseudo-foreign Companies in German International Company and Insolvency Law? -The Danger of Diverging Developments of the Connecting Factors in Company and Insolvency Law- 12 Eur. Bus. L. Rev. (EBLR) 79 (March/April 2001). (1022)Ann-Christine Halen, "Centre of Main Interests" - a New Concept in European Insolvency Law (2002) (Masters of Law Thesis, Lund University Faculty of Law) available at (1023) Federico Maria Mucciarelli, The Transfer of the Registered Office and Forum- Shopping in International Insolvency Cases: an Important Decision from Italy- Case Note on the Decision "B & C" of the Italian Corte di Cassazione -, 2 Eur. Comp. & Fin. L. Rev. (ECFLR) 109 (2005). (1024) Thomas Bachner, The Battle over Jurisdiction in European Insolvency Law - ECJ 2.5.2006, C-341/04 (Eurofood) -, 3 Eur. Comp. & Fin. L. Rev. (ECFLR) 1310 (2006). ( 1025) Bob Wessels, The Place of the Registered Office of a Company: a Cornerstone in the Application ofthe EC Insolvency Regulation, 3 Eur. Co. L. 183 (2006). (1026)LucaEnriques & Martin Gelter, How the Old World Encountered the New One: Regulatory Competition and Cooperation in European Corporate and Bankruptcy Law, 81 Tulane L. Rev. 577 (2007).

(e) Delawarization Fears

(1027) Catherine Holst, European Company Law after Centros: Is the EU on the Road to Delaware, 8 Colum. J. Eur. L. 323 (2002). (1028) Luca Enriques, EC Company Law and the Fears of a European Delaware, 15 Eur. Bus. L. Rev. 1259 (2004). (1029) Robert R. Drury, The "Delaware Syndrome": European Fears and Reactions, 2005 J. Bus. L. 709 (2005). (1030) Karolina Carlsson, A Possible European Delaware - Can the European Private Company Prevent It?- (May 2006) (Masters' Thesis, Jonkoping International Business School) available at (1031)Patrick S. Ryan, Will There Ever Be a Delaware of Europe?, 11 Colum. J. Eur. L. 187 (Winter 2004/2005).

74 (4) Forum Selection in the European Union

(a) Choice of Law within the European Union

(1032) Tobias H. Trager, Choice ofJurisdiction in European Corporate Law - Perspectives of European Corporate Governance, 6 Eur. Bus. Org. L. Rev. (EBOR) 3 (Mar., 2005). (1033) Massimo V. Benedettelli, Conflicts ofJurisdiction and Conflicts ofLaw in Company Law Matters within the EU 'Market for Corporate Models', in INTERNATIONAL THEMES IN BUSINESS LAW (Stephen T Hardy & Mark Butler eds.) (Sage Publications: 2007). (1034) Werner F. Ebke, The European Conflict-of-Corporate-Laws Revolution, in INTERNATIONAL THEMES IN BUSINESS LAW (Stephen T Hardy & Mark Butler eds.) (Sage Publications: 2007).

(b) Conflict of Laws Rules within the European Union

(1035) Eric Stein, Conflict-of-Laws Rules by Treaty: Recognition of Companies in a Regional Market, 68 Mich. L. Rev. 1327 (Jun., 1970). (1036) Gaute Simen Gravir, Conflict of Laws Rules for Norwegian Companies, 12 Eur. Bus. L. Rev. (EBLR) 146 (2001). (1037)Erik Werlauff, The Main Seat Criterion in a New Disguise, 12 Eur. Bus. L. Rev. (EBLR) 2 (2001). (103 8) STEPHAN RAMMELOO, CORPORATIONS IN PRIVATE INTERNATIONAL LAW: A EUROPEAN PERSPECTIVE (Oxford University Press, 2001). (1039) Werner F. Ebke, The "Real Seat" Doctrine in the Conflict of Corporate Laws, 36 Int'l Law. 1015 (2002).

(1040) Berthold Goldman, The Convention between the Member States of the European Economic Community on The Mutual Recognition of Companies and Legal Persons, 6 Com. Mar. L. Rev. (CMLR) 104 (Nov., 1968). (1041) Philippe Colle, The Influence of the European Convention on Mutual Recognition of Companies and Legal Persons, and of the Directives on Company Law upon the

75 Legal Status ofthe One-man Company in Belgium, 19 Com. Mar. L. Rev. (CMLR) 79 (1982). (1042) Robert R. Drury, The Regulation and Recognition of Foreign Corporations: Responses to the 'Delaware Syndrome', 57 Corp. L.J. 165 (1998) reprinted at 57 Cambridge L.J. 165 (1998). (1043)Erik Werlauff, Using a Foreign Company for Domestic Activities, 10 Eur. Bus. L. Rev. (EBLR) 306 (July 1999). (1044) Eva Micheler, Recognition of Companies Incorporated in Other EU Member States, 52 Int'l Comp. L. Q. (ICLQ) 521 (Apr., 2003). (1045) Wulf-Henning Roth, Recognition of Foreign Companies in Siege Reel Countries: A German Perspective, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 29 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (1046) Stephan Rammeloo, Recognition of Foreign Companies in "Incorporation" Countries: A Dutch Perspective, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 47 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995).

(d) Corporate Mobility within the E.U.

(1047)Inne G. F. Cath, Freedom of Establishment of Companies: A New Step Towards Completion ofthe Internal Market, 6 Y.B. Eur. L. 246 (1986). (1048)Jaap W. Bellingwout, Company Migration in Motion: The KPMG Report 1993, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 75 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (1049) Harry Rajak, Proposal for a Fourteenth European and Council Directive on the Transfer of the Registered Office or de facto Head Office of a Company from One Member State to Another with a Change in Applicable Law, 11 Eur. Bus. L. Rev. (EBLR) 43 (2000). (1050)Norbert Kuehrer, Cross-border Company Establishment, 12 Eur. Bus. L. Rev. 110 (2001). (1051)Alexandros Roussos, Realising the Free Movement of Companies, 12 Eur. Bus. L. Rev. (EBLR) 7 (2001). (1052) Christian Kersting, Corporate Choice of Law - A Comparison between the United States and European Systems and a Proposal for a European Directive, 28 Brook. J. Int'l L. 1 (2002). (1053) Eddy Wymeersch, The Transfer of the Company's Seat in European Company Law, 40 Com. Mar. L. Rev. (CMLR) 661 (2003).

76 (1054) Discussion Section, Themes from the Conference: Transfers of Seat, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 149 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1055) Peter Dyrberg, Full Free Movement of Companies in the European Community at Last?, 28 Eur. L. Rev. 528 (2003). (1056)Eddy Wymeersch, The Transfer of the Company's Seat in European Company Law, 40 Common Mkt. L. Rev. 661 (2003). (1057)Eddy Wymeersch, Cross-Border Transfer of the Seat of a Company - Recent EU Case Law and the SE, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LA w OF CORPORATIONS, 83 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1058) Discussion Section, Transfers of Seat, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LA w OF CORPORATIONS, 149 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1059) Gilbert Parleani, Relocation and Taxation: the European Court of Justice Disallows the French Rule of Direct Taxation of Unrealised Gains - Commentary on the ECJ's Decision in Hughes de Lasteyrie du Saillant -, 1 Eur. Comp. & Fin. L. Rev. (ECFLR) 379 (2004). (1060)Manuel Garcia-Riestra, The Transfer of Seat of the European Company v. Free Establishment Case-Law, 15 Eur. Bus. L. Rev. (EBLR) 1295 (2004). (106l)Jens C. Dammann, Freedom of Choice in European Corporate Law, 29 Yale J. Int'I L. 477 (2004). (1062) Wolf-Georg Ringe, No Freedom ofEmigration for Companies?, 16 Eur. Bus. L. Rev. (EBLR) 621 (2005). (1063) Mads Andenas, Tilmann G-Utt & Matthias Pannier, Free Movement of Capital and National Company Law, 16 Eur. Bus. L. Rev. (EBLR) 757 (2005). (1064) Enrico Vaccaro, Transfer of Seat and Freedom of Establishment in European Company Law, 16 Eur. Bus. L. Rev. (EBLR) 1348 (2005). (1065) Gert-Jan Vossestein, Capital and Companies: On the Move!, 3 Eur. Co. L. 124 (2006). (1066) Gert-Jan Vossestein, Exit Restrictions on Freedom of Establishment after Marks & Spencer, 7 Eur. Bus. Org. L. Rev. (EBOR) 863 (Dec., 2006). (1067) Wolfgang Schon, The Mobility of Companies in Europe and the Organizational Freedom ofCompany Founders, 3 Eur. Comp. & Fin. L. Rev. (ECFLR) 122 (2006). (1068) Andrew Johnston, EC Freedom of Establishment, Employee Participation in Corporate Governance and the Limits of Regulatory Competition, 6 J. Corp. L. Stud. 71 (Apr. 2006). (1069) Gero Burwitz, Tax Consequences of the Migration of Companies: A Practitioner's Perspective, 7 Eur. Bus. Org. L. Rev. (EBOR) 589 (Jun., 2007).

77 (1070) Eddy Wymeersch, Is a Directive on Corporate Mobility Needed?, 8 Eur. Bus. Org. L. Rev. (EBOR) 161 (March 2007). (1071)Robert R. Drury, Migrating Companies, in INTERNATIONAL THEMES IN BUSINESS LAW (Stephen T Hardy & Mark Butler eds.) (Sage Publications: 2007). (1072)Arianna Ugliano, The New Cross-Border Merger Directive: Harmonisation of European Company Law and Free Movement, 18 Eur. Bus. L. Rev. (EBLR) 585 (2007). (1073) Dilek Ozkok-<;ubuk9u & Korkut Ozkorkut, Extraterritorial Corporate Mobility from the Perspective of Company and Tax Law and the European Company, 23 Ban. & Com. L. Ins. J. (BATIDER) 111 (2007) [in Turkish: "$irketler Hukuku ve Vergi Hukuku Yoniinden Sznzrotesi $irket Hareketliligi ve Avrupa $irketi"] (1074) William W. Bratton, Joseph A. McCahery & Eric P. M. Vermeulen, How Does Corporate Mobility Affect Lawmaking? A Comparative Analysis (ECGI - Law Working Paper No. 91/2008, January 2008) available at .

(e) The European Company (Societas Europaea)

(1075)Pieter Sanders, The European Company on Its Way, 8 Common Market L. Rev. (CMLR) 29 (1971). (1076)Andreas Wehlau, The Societas Europea: A Critique of the Commission's 1991 Amended Proposal, 29 Com. Mar. L. Rev. (CMLR) 473 (1992). (1077) S. Israel, The European Company Statute - SE, in FURTHER PERSPECTIVES IN FINANCIAL INTEGRATION IN EUROPE, 219 (Eddy Wymeersch ed.) (Berlin-New York, 1994). (1078) Christian R. Huiskes, The European Company as an Instrument for Corporate Reorganisations within the European Internal Market, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 157 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (1079) Krister Moberg, The European Company in Nordic Countries, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 169 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (1080) J. Gray, Law Society Company Law Committee Responds to DTI Consultation Paper on the European Company Statute, 18 Comp. L. 331 (1997). (1081) Marie-Agnes Arlt, Cecile Bervoets, Kristoffel Grechenig & Suanne Kalss, The Societas Europaea in Relation to the Public Corporation of Five Member States (France, Italy, Netherlands, Spain, Austria), 3 Eur. Bus. Org. L. Rev. (EBOR) 733 (2002). (1082) Brent Springael, Taxation Issues and the Single European Company: A Preliminary Look at Societas Europaea, 14 Euro Watch 1 (2002).

78 (1083)Anna Avagainou, The European Company Statute, (Eur. L. Stud. Assoc. (ELSA) Selected Papers, Paper No. 2002(2), 2002) available at . (1084) Jonathan Rickford, Inaugural Lecture - The European Company, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LA w OF CORPORATIONS, 13 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1085) Pieter Sanders, The SE: From Conception to Reality, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 37 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1086) Jose Garrido, Company Law and Capital Markets, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LA w OF CORPORATIONS, 95 (Jonathan Rickford eds.) (Intersentia Publishing, 2003 ). (1087) Christoph Teichmann, The European Company - A Challenge to Academics, Legislatures and Practitioners, 4 German L. J. (Apr. 1, 2003) reprinted in THE REGULATION OF COMPANIES: A TRIBUTE TO PAUL KROGER ANDERSEN, 251 (Mette Neville & Karsten Engsig S0rensen eds.) (Forlaget Thomson A/S; 2003). (1088)Jaap Winter, Thalassa! Thalassa! - The SE as a Glimpse of the Future?, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 113 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1089) Discussion Section, Effects of the SE on Regulatory Competition, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 139 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1090)Erik Werlauff, The SE Company - A New Common European Company from 8 October 2000, 14 Eur. Bus. L. Rev. (EBLR) 85 (2003). (1091) Discussion Section, Themes from the Conference: Effects of SE on Regulatory Competition, in THE EUROPEAN COMPANY: DEVELOPING A COMMUNITY LAW OF CORPORATIONS, 139 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1092) Sabine Ebert, The European Company on the Level Playing Field of the Community, 14 Eur. Bus. L. Rev. (EBLR) 183 (2003). (1093) Otmar Th6mmes, EC Law Aspects ofthe Transfer ofSeat ofan SE, 44 Eur. Taxat. 22 (Jan., 2004). (1094) Soler Roch & Maria Teresa, Tax Residence ofthe SE, 44 Eur. Taxat. 11 (Jan., 2004). (1095) Paolo Conci, The Tax Treatment of the Creation of a SE, 44 Eur. Taxat. 15 (Jan., 2004). (1096) Erik Werlauff, Societas Europaea Sum, 1 Eur. Co. L. 110 (2004). (1097) Theo Raaijmakers, The Statute for a European Company: Its Impact on Board Structures, and Corporate Governance in the European Union, 5 Eur. Bus. Org. L. Rev. (EBOR) 159 (2004). (1098) Michel Menjucq, Implementation in France of the Regulation on the European Company: A Strategic Interpretation, 1 Eur. Co. L. 117 (Oct., 2004).

79 (1099) Malcolm Gammie, EU Taxation and the Societas Europaea -- Harmless Creature or Trojan Horse?, 44 Eur. Taxat. 35 (Jan., 2004). (1100)KRZYSZTOF 0PLUSTIL & CHRISTOPH TEICHMANN THE EUROPEAN COMPANY: ALL OVER EUROPE : A STATE-BY-STATE ACCOUNT OF THE INTRODUCTION OF THE EUROPEAN COMPANY (Walter de Gruyter Publishing; 2004). (1101) Vanessa Edwards, The European Company - Essential Tool or Eviscerated Dream?, 40 Com. Mar. L. Rev. (CMLR) 443 (2003). (1102) Erik Werlauff, Cross-border Transfers ofSE Companies, 1 Eur. Co. L. 121 (2004). (1103) Stefano Lombardo & Piero Pasotti, The Societas Europaea: a Network Economics Approach, 1 Eur. Comp. & Fin. L. Rev. (ECFLR) 169 (2004). (1104) Roopa Aitken & Chris Morgan, Societas Europaea: Is Tax an Incentive or a Barrier?, 15 Eur. Bus. L. Rev. (EBLR) 1343 (2004). (1105) Hanno Merkt, European Company Law Reform: Struggling for a More Liberal Approach, 1 Eur. Comp. & Fin. L. Rev. (ECFLR) 3 (2004). ( 1106) Luca Enriques, Silence Is Golden: The European Company Statute as a Catalyst for Company Law Arbitrage, 4 J. Corp. L. Stud. 77 (2004). (1107) Stefano Lombardo & Piero Pasotti, The Societas Europaea: a Network Economics Approach, 1 Eur. Co. & Fin. L. Rev. 169 (2004). (1108) Nicolas Tollet, The Societas Europea: Europeanization via Americanization of Corporate Law. Corporate Governance: Only One Model?, 5 Global Jurist Topics (2005) available at . (1109) Christian R. Huiskes & Gerard Meussen, The Place of the European Company in Company and Tax Law, in THE EUROPEAN COMPANY: CORPORATE GOVERNANCE AND CROSS-BORDER REORGANIZATIONS FROM A LEGAL AND TAX PERSPECTIVE, 1 (Sven H.M.A. Dumoulin, Christian R. Huiskes, Eric C.C.M. Kemmeren & Ger J.H. van der Sangen eds.) (Boom Juridische uitgevers; 2005). (1110) Christian R. Huiskes, The European Company According to Netherlands Law: Which Choices Should the Netherlands Legislator Have Made?, in THE EUROPEAN COMPANY: CORPORATE GOVERNANCE AND CROSS-BORDER REORGANIZATIONS FROM A LEGAL AND TAX PERSPECTIVE, 35 (Sven H.M.A. Dumoulin, Christian R. Huiskes, Eric C.C.M. Kemmeren & Ger J.H. van der Sangen eds.) (Boom Juridische uitgevers; 2005). (1111) Ger van der Sangen & Wendela Mulder, The European Company and Cross-Border Reorganizations: The Impact of the SE Statute on the Development of EU Company and Tax Law, in THE EUROPEAN COMPANY: CORPORATE GOVERNANCE AND CROSS- BORDER REORGANIZATIONS FROM A LEGAL AND TAX PERSPECTIVE, 95 (Sven H.M.A. Dumoulin, Christian R. Huiskes, Eric C.C.M. Kemmeren & Ger J.H. van der Sangen eds.) (Boom Juridische uitgevers; 2005). (1112) Michael Gold & Sandra Schwimbersky, The European Company Statute: Implications for Industrial Relations in the European Union, 14 Eur. Indus. Rel. 45 (2006).

80 (1113) Christoph Teichmann, "Law as a Product" - Regulatory Competition in the Common Market and the European Private Company, in EUROPEAN COMPANY LA w IN ACCELERATED PROGRESS, 145 (Steef M. Bartman ed.) (Kluwer Publications: 2006). (1114) NOELLE LENOIR, THE SOCIETAS EUROPAEA OR SE - THE NEW EUROPEAN COMPANY: REPORT COMMISSIONED BY THE FRENCH MINISTER OF JUSTICE (HEC EUROPE INSTITUTE, PARIS; JUL., 2007) available at (Last visited Feb. 17, 2008). (1115) Marios Bouloukos, The European Company (SE) as a Vehicle for Corporate Mobility within the EU: A Breakthrough in European Corporate Law?, 18 Eur. Bus. L. Rev. (EBLR) 535 (2007). (1116) Christine Hodt Dickens, Establishment of the SE Company: An Overview over the Provisions Governing the Formation of the European Company, 18 Eur. Bus. L. Rev. (EBLR) 1423 (2007). (1117) Noelle Lenoir, The SE or Societas Europaea - a European Citizenship for Corporations, 4 Eur. Co. L. 116 (2007). (1118) Lorenzo Sasso, Societas Europaea: between Harmonization and Regulatory Competition, 4 Eur. Co. L. 159 (2007).

(f) The European Private Company

(1119) Andrew Hicks & Robert Drury, The Proposal for a European Private Company, 1999 J. Bus. L. 429 (1999). (1120) Arkadiusz Radwan, European Private Company and the Regulatory Landscape in the EU - An Introductory Note, 18 Eur. Bus. L. Rev. (EBLR) 769 (2007).

(5) Development of the European Jurisprudence

(a) In General

(1121) Jan Wouters, The European Court of Justice and Fiscal Barriers to Companies' Cross-Border Establishment, in CURRENT ISSUES OF CROSS BORDER ESTABLISHMENT OF COMPANIES IN THE EUROPEAN UNION, 101 (Jan Wouters & Hildegard Schneider eds.) (Antwerp, Maklu, 1995). (1122) Luca Cerioni, The Barriers to the International Mobility of Companies within the European Community: A Re-reading ofthe Case-Law, 1 J. Bus. L. 59 (1999). (1123) Wulf-Henning Roth, Case Law, 37 Common Mkt. L. Rev. (CMLR) 147 (2000).

81 (1124) Eddy Wymeersch, Cross-Border Transfer of the Seat of a Company - Recent EU Case Law and the SE, in THE EUROPEAN COMP ANY: DEVELOPING A COMMUNITY LA w OF CORPORATIONS, 83 (Jonathan Rickford eds.) (Intersentia Publishing, 2003). (1125) Ulrich Klinke, European Company Law and the ECJ: The Court's Judgments in the Years 2001 to 2004, 2 Eur. Co. & Fin. L. Rev. (ECFLR) 270 (June 2005). (1126) Patrick S. Ryan, Will There Ever Be a Delaware of Europe?, 11 Colum. J. Eur. L. 187 (Winter 2004/2005). (1127) Peter Sester & Jose Luis Cardenas, The Extra-Communitarian Effects of Centros, Uberseering and Inspire Art with Regard to Fourth Generation Association Agreements, 2 Eur. Co. & Fin. L. Rev. (ECFR) 398 (Sept., 2005). (1128) Daniel Durrschmidt, Judicial Review of Takeover Panel Decisions, 16 Eur. Bus. L. Rev. (EBLR) 1133 (2005).

(b) Centros2

(1129)D. Martin, Comments on Terhoeve (Case C-18/95 of 26 January 1999), Centros (Case C-212/97 of 9 March 1999) and Meeusen (Case C-337/97 of 8 June 1999), 1 Eur. J. Migration & L. 385 (1999). (1130) Karsten Engsig S0rensen, Prospects for European Company Law After the Judgment of the European Court of Justice in Centros Ltd., 2 Cambridge Y.B. Eur. L. Stud. 203 (1999). (1131) Simon Deakin, Two Types ofRegulatory Competition: Competitive Federalism versus Reflexive Harmonisation. A Law and Economics Perspective on Centros, 2 Cambridge Y.B. Eur. L. Stud. 231 (1999). (1132) Richard M. Buxbaum, Back to the Future? From 'Centros' to the 'Uberlagerungstheorie ', in FESTSCHRIFT FUR OTTO SANDROCK ZUM 70. GEBURTSTAG 149 (K. Berger et al. eds., Heidelberg 2000). (1133) Paul J. Omar, Centros Revisited; Assessing the Impact on Corporate Organisation in Europe, Int'l Co .. & Com. L. Rev. 407 (2000). (1134) Luca Cerioni, A Possible Turning-point in the Development of EC Company Law: The Centros Case, 2 Int'l & Comp. Corp. L. J. 165 (2000). (1135) Vanessa Edwards, Case-Law of the European Court of Justice on Freedom of Establishment after Centros, 1 Eur. Bus. Org. L. Rev. (EBOR) 147 (2000). (1136) Werner F. Ebke, Centros-Some Realities and Some Mysteries, 48 Am. J. Comp. L. 623 (2000).

2 Case C-212/97, Centros Ltd. v. Erhvervs-og Selskabsstyrelsen, [1999] E.C.R. 1-1459 (Mar. 9, 1999).

82 (1137)Helen Xanthaki, Centros: Is This Really the End/or the Theory of Siege Reel?, 22 Co. Law. 2 (2000). (1138) Daniel Zimmer, Private International Law of Business Organizations, 1 Eur. Bus. Org. L. Rev. (EBOR) 585 (2000). (1139) Eva Micheler, The Impact of the Centros Case on Europe's Company Laws, 21 Comp. L. 179 (2000). (1140)Anne Looijestijn-Clearie, Centros Ltd. - A Complete U-Turn in the Right of Establishment/or Companies, 49 Int'l & Comp. L.Q. 621 (2000). (1141) Eddy Wymeersch, Centros: A Landmark decision in European Company Law, in CORPORATIONS, CA PIT AL MARKETS AND BUSINESS IN THE LAW: LIBER AMI CORUM 629 (Richard M. Buxbaum et al. eds., London: 2000). (1142) Peter Behrens, International Company Law in View of the Centros Decision of the ECJ, 1 Eur. Bus. Org. L. Rev. (EBOR) 125 (2000). (1143)Marc Lauterfeld, "Centros" and the EC Regulation, 12 Eur. Bus. L. Rev. (EBLR) 79 (2001). (1144) Peter Behrens, Reactions ofMember State Courts to the Centros Ruling by the ECJ, 2 Eur. Bus. Org. L. Rev. (EBOR) 159 (2001). (1145) Paul Rose, EU Company Law Convergence Possibilities after Centros, 11 Transnat'l L. & Contemp. Probs. 121 (2001). (1146) Catherine Holst, European Company Law after Centros: Is the EU on the Road to Delaware, 8 Colum. J. Eur. L. 323 (2002). (1147) Jesper Lau Hansen, A New Look at Centros From a Danish Point of View, 13 Eur. Bus. L. Rev. (EBLR) 85 (2002). (1148)Peter Behrens, Centros and the Proper Law of Companies, in CAPITAL MARKETS IN THE AGE OF THE EURO: CROSS-BORDER TRANSACTIONS, LISTED COMPANIES AND REGULATION 503 (Guido. Ferrarini et al. eds., The Hague: 2002). (1149) Mathias M. Siems, Convergence, Competition, Centros and Coriflicts of Law: European company Law in the 21st Century, 27 Eur. L. Rev. 47 (2002). (1150) Jens C. Dammann, The Future of Codetermination after Centros: Will German Corporate Law move closer to the US. Model?, 8 Fordham J. Corp. & Fin. L. 607 (2003). (1151) Martin Ebers, Company Law in Member States against the Background of Legal Harmonisation and Competition between Legal Systems, 11 Eur. Rev. Priv. L. 509 (2003). (1152) Massimo V. Benedettelli, Conflicts ofJurisdiction and Conflicts of Law in Company Law Matters Within the EU 'Market for Corporate Models': Brussels I and Rome I after Centros, 16 Eur. Bus. L. Rev. (EBLR) 55 (2005). (1153) P. Muchlinski, Corporations in International Litigation, in INTERNATIONAL THEMES IN BUSINESS LA w (Stephen T Hardy & Mark Butler eds.) (Sage Publications: 2007).

83 (1154) Eva Micheler, The Impact of the Centros Case on Europe's Company Laws, in INTERNATIONAL THEMES IN BUSINESS LAW (Stephen T Hardy & Mark Butler eds.) (Sage Publications: 2007).

(1155)Kilian Baelz & Teresa Baldwin, The End of the Real Seat Theory (Sitztheorie): the European Court of Justice Decision in Uberseering of 5 November 2002 and its Impact on German and European Company Law, 3 German L. J. (Dec. 1, 2002). (1156) Luca Cerioni, The Uberseering Ruling: The Eve of a Revolution for the Possibilities of Companies' Migration throughout the European Community?, 10 Colum. J. Eur. L. 117 (Winter 2003). (1157) Frank Wooldridge, Uberseering: Freedom of Establishment of Companies Affirmed, 14 Eur. Bus. L. Rev. (EBLR) 227 (2003). (1158) Stefano Lombardo, Conflict of Law Rules in Company Law after Uberseering: An Economic and Comparative Analysis of the Allocation of Policy Competence in the European Union, 4 Eur. Bus. Org. L. Rev. (EBOR) 301 (2003). (1159) Wulf-Henning Roth, From Centros to Uberseering: Free Movement of Companies, Private International Law, and Community Law, 52 Int'l & Comp. L. Q (ICLQ) 177 (2003). (1160) Andrea J. Gildea,, Uberseering: A European Company Passport, 30 Brook. J. Int'l L. 257 (2004). (1161) Werner F. Ebke, The European Conflict-of-Corporate-Laws Revolution: Ubeerseering, Inspire Art and Beyond, 16 Eur. Bus. L. Rev. (EBLR) 9 (2005). (1162) Hanne S0ndergaard Birkmose, A Market for Company Incorporations in the European Union?-Is Uberseering the Beginning of the End?, 13 Tul. J. Int'l & Comp. L. 55 (2005).

(d) Inspire Art4

(1163) Christian Kersting & Clemens P. Schindler, The ECJ's Inspire Art Decision of 30 September 2003 and its Effects on Practice, 4 German L. J. 1277 (2003) available at

3 Case C-208/00, Oberseering BY v. Nordic Constr. Co. Baumanagement GmbH (NCC), [2002] E.C.R. 1- 9919 (Nov. 5, 2002). 4 Case C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd., [2003] E.C.R. I-. 10155 (Sept. 30, 2003). 84 (1164) Harm-Jan de Kluiver, Inspiring a New European Company Law? - Observations on the ECJ's Decision in Inspire Art from a Dutch Perspective and the Imminent Competition for Corporate Charters between EC Member States, 1 Eur. Co. & Fin. L. Rev. 121 (2004). (1165)Daniel Zimmer, Case C-167/01, Kamer van Koophandel en Fabrieken voor Amsterdam v. Inspire Art Ltd., 41 Common Mkt. L. Rev. 1127 (2004). (1166) Hans C. Hirt, International Company Law and the Comparison of European Company Law Systems after the ECJ's Decision in Inspire Art Ltd., 15 Eur. Bus. L. Rev. (EBLR) 1189 (2004). (1167) Anne Looijestijn-Clearie, Have the Dikes Collapsed? Inspire Art: A Further Break- Through in the Freedom of Establishment of Companies?, 5 Eur. Bus. Org. L. Rev. (EBOR) 389 (2004). (1168) Christian Kirchner, Richard W. Painter, & Wulf A. Kaal, Regulatory Competition in EU Corporate Law After Inspire Art: Unbundling Delaware 's Product for Europe, 2 Eur. Comp. & Fin. Rev. (2005). (1169) Alexander Schall, The UK Limited Company Abroad - How Foreign Creditors are Protected after Inspire Art (Including a Comparison of UK and German Creditor Protection Rules), 16 Eur. Bus. L. Rev. (EBLR) 1534 (2005). (1170) Peter Sester & Jose Luis Cardenas, The Extra-Communitarian Effects of Centros, Vberseering and Inspire Art with Regard to Fourth Generation Association Agreements, 2 Eur. Co. & Fin. L. Rev. (ECFR) 398 (Sept., 2005). (1171) Dmitry Tuchinsky, The Takeover Directive and Inspire Art: Reevaluating the European Union's Market for Corporate Control in the New Millennium, 51 N. Y.L. Sch. L. Rev. 688 (2006 / 2007). (1172) Kai F. Sturmfels, "Pseudo-foreign companies" in Germany - The Centros, Vberseering and Inspire Art decisions of the European Court of Justice, in KEY ASPECTS OF GERMAN BUSINESS LAW: A PRACTICAL MANUAL 63 (Michael Wendler, Bernd Tremml & Bernard Buecker eds., Berlin/Heidelberg: 2006).

{e) Hughes de Lasteyrie du Saillant5

(1173) Gilbert Parleani, Relocation and Taxation: the European Court of Justice Disallows the French Rule of Direct Taxation of Unrealised Gains - Commentary on the ECJ's Decision in Hughes de Lasteyrie du Saillant -, 1 Eur. Co. & Fin. L. Rev. (ECFR) 379 (2004).

5 Case C-9/02, Hughes de Lasteyrie du Saillant v. Ministere de l'Economie, des Finances et de l'Industrie [2004] ECR 1-2409 (Mar. 11, 2004).

85 (t) Marks & Spencer6

(1174) David Evans, Robert Hodges & Ben Kiekebeld, What the Marks & (and) Spencer Case Will Mean, 14 Int'l Tax Rev. 34 (2003). (1175) Jonathan Hare, Marks & (and) Spencer: EU Claims for Cross-Border Loss Relief, 57 Tax Executive 340 (2005).

(g) SEVIC7

(1176) Clemens Philipp Schind, Cross-Border Mergers in Europe - Company Law is catching up! - Commentary on the ECJ's Decision in SEVIC Systems AG, 3 Eur. Comp. & Fin. L. Rev. (ECFLR) 109 (2006). (1177) Thomas R0nfeldt & Erik Werlauff, Merger as a Method of Establishment: on Cross- border Mergers, Transfer of Domicile and Divisions, Directly Applicable under the EC Treaty's Freedom ofEstablishment, 3 Eur. Co. L. 125 (2006). (1178) Gert-Jan Vossestein, Companies' Freedom ofEstablishment after Sevic, 3 Eur. Co. L. 177 (2006). (1179) Clemens P. Schindler, Cross-Border Mergers in Europe - Company Law is catching up! - Commentary on the ECJ's Decision in SEVIC Systems AG, 2006, 3 Eur. Co. & Fin. L. Rev. (ECFR) 109 (2006). (1180) Benjamin Angelette, The Revolution that Never Came and the Revolution Coming- De Lasteyrie du Salliant, Marks & Spencer, Sevic Systems and the Changing Corporate Law in Europe, 92 Va. L. Rev. 1189 (2006).

B. Australia

(1181) Rob McQueen, Why High Court Judges Make Poor Historians: The Corporations Act Case and Early Attempts to Establish a National System of Company Regulation in Australia, 19 Fed. L. Rev. 245 (1990). (1182) Robert Austin, Federal-State Conflicts as Seen in the Light of the Australian Experience Regarding Securities Regulation, in EUROPEAN BUSINESS LAW: LEGAL AND ECONOMIC ANALYSES ON lNTEGRA TION AND HARMONIZATION, 167 (Richard Buxbaum, Gerard Hertig, Alain Hirsch & Klaus Hopt eds.) (Berlin/New York, De Gruyter, 1991).

6 Case C-446/03, Marks & Spencer PLC v. David Halsey (Her Majesty's Inspector of Taxes), [2005] ECR, 1-10837 (Dec. 13, 2005). 7 Case C-411/03, SEVIC Sys. AG v. Amtsgericht Neuwied, [2005] ECR 1-10805 (Dec. 13, 2005). 86 (1183) Joanna Bird & Jennifer Hill, Regulatory Rooms In Australian Corporate Law, 25 Brooklyn J. Int'l L. 555 (1999). (1184) Stephen Bottomley, Where did the law go? The Delegation of Australian Corporate Regulation, 15 Aust. J. Corp. L. 105 (2003). (1185) Angus Corbett & Stephen Bottomley, Regulating Corporate Governance, in PRINCIPLES OF CONTEMPORARY CORPORATE GOVERNANCE, 107 (Jean Jacques du Plessis, James McConvill & Mirko Bagaric eds.) (Cambridge University Press, 2005). (l 186)Andrew Clarke, Australia's Corporate Governance: Balancing Historic, Regional and Free Trade Paradigms, 18 Aust. J. Corp. L. (AJCL) 103 (2005).

C. Canada

(1187) H. G. Garrett, Phases of Company Law in Canada, 37 Can. L. Times 706 (1917). (1188) Ronald J. Daniels & Jeffrey Macintosh, Capital Markets and the Law: The Particular Case of Canada, 3 Can. Inv. Rev. 77 (1990). (1189) Ronald J. Daniels, Should Provinces Compete? The Case for a Competitive Corporate Law Market, 36 McGill L. J. 130 (1991). (1190) Kenneth G. Ottenbreit & John E. Walker, Learning From the Delaware Experience: A Comparison of the Canada Business Corporations Act and the Delaware General Corporation Law, 29 Can. Bus. L.J. 364 (1998). (1191) Douglas J. Cumming & Jeffrey G. Macintosh, The Role of Interjurisdictional Competition in Shaping Canadian Corporate Law, 20 Int'l Rev. L. & Econ. 141, 147 (2000). (1192) Jeffrey Macintosh, The Role of Interjurisdictional Competition in Shaping Canadian Corporate Law: A Second Look, 20 Int'l Rev. of Law & Econ. 141 (2000).

D. China

(1193) Thomas Eger & Margot Schuller, A Comparison of Chinese and European-style Federalism.from a Law and Economics Perspective, in ECONOMIC ANALYSIS OF LAW IN CHINA, 3 (Thomas Eger, Michael Faure, & Zhang Naigen eds.) (Edward Elgar Publishing, 2007). (1194)Jianwei Zhang & Yijia Jing, Legal Pluralism in the Governance of Transitional China, Thomas Eger & Margot Schuller, A Comparison of Chinese and European- style Federalism from a Law and Economics Perspective, in ECONOMIC ANALYSIS OF LAW IN CHINA, 55 (Thomas Eger, Michael Faure, & Zhang Naigen eds.) (Edward Elgar Publishing, 2007).

87 E. Germany

(1195)Lutz-Christian Wolff, Law as a Marketing Gimmick - The Case of the German Corporate Governance Code, 3 Wash. U. Global Stud. L. Rev. 115 (2004).

F. Italy

(1196) Marco Ventoruzzo, Experiments in Comparative Corporate Law: The Recent Italian Reform and the Dubious Virtues of a Market for Rules in the Absence of Effective Regulatory Competition, 40 Tex. lnt'I L.J. 113 (2004-2005).

G. Japan

(1197)Miwa, Yoshiro & J. Mark Ramseyer. Toward a Theory ofJurisdictional Competition: The Case ofthe Japanese FTC, 1 J. Comp. L. & Econ. 247 (2005).

H. Switzerland

(1198) Lars P. Feld, Regulatory Competition and Federalism in Switzerland: Diffusion by Horizontal and Vertical Interaction, CREMA Research Paper, Paper No.22, (2006) available at

I. Emerging Markets

(1199)Andrew T. Guzman, Capital Market Regulation in Developing Countries: A Proposal, 39 Va. J. Int'l L. 607 (1999). (1200) Katharina Pistor, Patterns of Legal Change: Shareholder and Creditor Rights in Transition Economies, 1 Eur. Bus. Org. L. Rev. (EBOR) 59 (2000).

88 Bailey, Martin J. : 488 INDEXES Bainbridge, Stephen M. : 863 Baldwin, Teresa : 1154 Ballantine, Henry W. : 405 Bamonte, Thomas J. : 615 INSTITUTIONS INDEX Bank, Steven A. : 572 Bar-Gill, Oren : 542 [ABA] Ad Hoc Committee on Business Courts: 670 Barnard, Catherine : 40, 891, 957 [ABA] The Committee on Corporate Laws: 203 Bartman, Steef : 1006, 1013 [Delaware] Corporation Trust Co. : 324 Barzuza, Michal : 541, 542 U.S. Treas. Off. Tax Pol. : 228 U.S. Federal Trade Commission : 778 Baudisch, Matthias : 905 Baum, Harald : 383, 388 Baumann, K. H. : 993 AUTHOR INDEX Baumol, William J. : 31 Baums, Theodor : 933 Bayne, David C. : 478 A Baysinger, Barry D. : 535, 536 Beale, Joseph H., Jr. : 139 Abdelhamid, Doha M. : 98 Bebchuk, Lucian Arye: 276, 277, 391, 397, Adams, Frank T. : 430 422, 508, 542,641, 642,643, 649, 706, 710, Adler, Barry E. : 307 758, 798, 845 Ahdieh, Robert B. : 578 Becht, Marco : 739, 976 Aitken, Roopa : 1103 Behrens, Peter : 1141, 1143, 1147 Allen, William T. : 294, 454, 647 Bellingwout, Jaap W. : 1047 Alva, Curtis : 370 Benacchio, Antonio : 979 Ames, C. B. : 185 Benedettelli, Massimo V.: 1032, 1151 Andenas, Mads : 1062 Bergh, R. Van den : 882 Andersen, Richard E. : 202, 224 Bergh, Roger Van Den : 892 Anderson, Derek E. : 233 Berglof, Erik : I 002 Andersson, Jan : 973 Bergstrom, Clas : 989 Angelette, Benjamin : 1179 Berlack, Harris : 833 Aranson, Peter : 856 Berle, Adolph A. Jr. : 403 Arlt, Marie-Agnes : 1080 Bernauer, Thomas : 77 Armour, John : 652, 927 Bervoets, Cecile : 971, 1080, Arsalidou, Demetra : 718 Bhagat, Sanjai : 721 Arsenault, Pierre-Luc : 579 Bird, Joanna : 1182 Arsht, S. Samuel : 325, 326, 359, 434 Bird, Richard M. : 54 Art, Robert C. : 256 Birds, John : 983 Arthur, William Brian: 554, 556 Birkmose, Hanne S0ndergaard: 985, 1161 Atanasov, Vladimir A.: 22 Black, Bernard S. : 6, 18, 22, 644 Atkins, Tim F. : 966 Black, Lewis S., Jr. : 327 Austin, Robert : 1181 Blandi, Joseph G. : 344 A vagainou, Anna : 1082 Boehm, Theodore R. : 602 Ayres, Ian : 538 Bolkestein, Frits : 970 Booth, Richard A. : 126, 376 B Bostwick, Charles F. : 395 Bottomley, Stephen : 129, 1183, 1184 Bachner, Thomas : 1023 Bouloukos, Marios : 1114 Badr, Amin M. : 87 Bowman, Harold M. : 140 Baelz, Kilian : 1154 Boyer, Allen D. : 606

89 Brabner-Smith, John W.: 834 Chausovsky, J. J. : 386 Bradley, Caroline : 630 Chausovsky, Jonathan 392 Bradley, Michael : 125, 744 Cheffins, Brian : 60, 303 Brandeis, Louis D. : 404 Chertok, Seth : 923 Branson, Douglas M. : 292, 586 Chirelstein, Marvin A. : 794 Bratton, William W. : 37, 76, 273, 462, Choi, Dosoung : 752 470,493,501,539,543,567,580,895, 1073 Choi, Stephen J. : (21) Breeden, Richard C. : 128 Choi, Stephen J. : 64, 275, 313, 314, Brennan, Timothy J. : 466 316,317,318,322,373,860 Breton, Albert : 36, 53 Chorvat, Elizabeth : 231 Brewster, Kingman, Jr. : 103 Christensen, Jan Schaus : 1004 Brickley, James A. : 746 Church, William E. : 400 Brittain-Catlin, William : 243 Ciccotello, Conrad S. : 22 Brogan, Christopher J. : 791 Cioffi, John W. : 337, 494, 503, 507, 510, Brown, Gary M. : 425 884 Brown, Robert J., Jr. : 130, Clarke, Andrew : 1185 Buchanan, James M. : 29 Coates, John C. : 495, 519 Bullington, John P. : 135 Coffee, John C., Jr. : 65, 248, 249, 272, Burca, Shane de : 820 288,320,321,323,416,417,421,460,487, Burkart, Mike : I 002 520,521,585,614,658 Burke, Kerry Shannon: 20 Cohen, Alma : 649, 710, 758 Burnley, Richard : 1002 Cohen, Manuel F. : 804 Burwitz, Gero : 223, I 068 Coleman, Charles W. : 395 Butler, Henry N. : 307, 364, 366, Colle, Philippe : 1040 476,536,544,546,624,628,870 Colombo, John D. : 255, 268 Buxbaum, Richard M. : 120, 145, 147, Comment, Robert : 638 150, 193,557,594,656,678,681,875,940, Conard, Alfred F : 485, 719, 944 943, 1031 Conci, Paolo : 1094 Byttebier, Koen : 987 Cooter, Robert D. : 50, 51, 52, 55 Corbett, Angus : 1184 c Corroon, Richard F. : 356 Coudert, Frederic R. : 764 Cadman, John W., Jr. : 350 Cox, James D. : 309, 312 Calio, Christopher : 335 Cox, Paul N. : 148 Callison, J. William : 540 Crew, Michael A. : 483 Campbell, Heather : 235 Cumming, Douglas J. : 1190 Cantley, Beckett G. : 230 Curtis, William J. : 831 Cardenas, Jose Luis : 1169 Cyphers, Christopher J.: 377 Carlsson, Karolina : 1029 Camey, William J. : 58, 59, 123, 490, D 492,537 Caruso, Daniela : 953 Daines, Robert : 709, 725, 726, 727 Cary, William L. : 411, 412, 474, Dammann, Jens C. : 167, 278, 701, 599, 788,839 1060, 1149 Case, Robert A. : 13 7 Daniels, Ronald J. : 57, 1187, 1188 Cassone, Alberto : 53 Daniels, Ton : 991 Cath, Inne G. F. : 1046 Davis, Gerald F. : 633 Cerioni, Luca : 1021, 1133, 1155 Davis, Joseph S. : 339, 340 Chandler, William B., III : 866 de Jonge, Alice : : 250 Chaplin, H. W. : 762, 830 de Kluiver, Harm-Jan : 878, 1163 Charny, David : 843 90 Deakin, Simon : 40, 711, 898, 899, Evans, David : 1 I 72 929,930, 1030 Evans, George Heberton, Jr.: 349 DeMott, Deborah A. : 144, 608 Denton, Geoffrey : 880 F DeShazo, J.R. : 56 Dezalay, Yves : 491, 990 Faugerolas, Laurent : 967, 1003 Di Guglielmo, Christine T.: 390 Fead, Maxwell E. : 133 Dickens, Christine Hodt: 11 15 Feld, Lars P. : 1197 Dill, James B. : 824 Ferrara, Ralph C. : 458, 842 Dine, Janet : 941, 952 Ferrell, Allen : 276, 641, 642, Dodd, Edwin Merrick: 353 643, 798,845 Dodd, Peter : 73 1 Ferris, Stephen P. : 427 Donohue, Kevin F. : 269 First, Harry M. : 410 Dooley, Michael P. : 330 Fisch, Jill E. : 675, 814 Dorocak, John R. : 220 Fischel, Daniel R. : 436, 447, 603, 705 Dorresteijn, Adriaan F. M. : 909 Fishman, James J. : 267 Dougan, Michael : 956 Fitchew, Geoffrey : 883 Downs, Tom : 332 FitzGibbon, Scott : 199 Drexler, David A. : 157, 446, 857 Fleischer, Arthur, Jr. : 803 Driessen, Anthony : 694 Fluck, Zsuzsanna : 737, 738 Drury, Robert : 1118 Foley, Henry E. : 171 Drury, Robert : 913, 947 Folk, Ernest L., III : 3, 413, 522 Drury, Robert R. : 919, 1028, 1041, Fox, Merritt B. : 720, 742 1070 Frankel, Tamar : 257 Du Plessis, J. J. : 952 Franks, Julian R. : 998 Dtirrschmidt, Daniel : 1027 Franzese, Robert J., Jr.: 963 Dyrberg, Peter : 1054 Fraschini, Angela : 53 Freeman, Jody : 56 E Friendly, Henry J. : 801 Frost, Carsten : 916 E.,A. J. : 180 Fulco, Daniel A. : 667 Easmunt, Bruce : 563 Easterbrook, Frank :306,447,603,888 G Easterbrook, Frank H. : 17, 19 Ebers, Martin : 1150 Gammie, Malcolm : 1098 Ebert, Sabine : 1091 Garcia-Riestra, Manuel: 1059 Ebke, Werner F. : 1033, 1035, 1038, Garfield, Alan E. : 627, 629 1160 Garrett, H. G. : I 186 Eden, Lorraine : 226 Garrett, Ray : 3 52 Edwards, Vanessa : 1034, 1100 Garrido, Jose : 1085 Egan, Byron F. : 336 Gatti, Matteo : 982, 1008 Eger, Thomas : I I 92 Gelb, Harvey : 682 Eidenmtiller, Horst : 168 Gelter, Martin : 695, 914, 920, Eisenberg, Melvin Aron: 329, 415, 4 I 9, 420 922, 931, 1025 Ellickson, Robert C. : 715 Genetelli, Richard W. : 197 Emiliou, Nicholas : 881 Geradin, Damien : 62 Enriques, Luca : 685, 689, 908, Gert-Jan Vossestein : 1065, 1177 922, 931, 982, 984, 1025, 1027, 1105 Gesell, Harald : 1016 Epstein, Richard A. : 113 Gibson, George D. : 328 Esty, Daniel C. : 61, 62, 893 Gildea, Andrea J. : 1159 Evans, Alvin E. : 198 Gilson, Ronald J. : 587, 684, 646

91 Gitelman , Steven : 609 Hansen, Jesper Lau : 1146 Glazer, Donald W. : 199 Hansen, Lone L. : 1018 Glynn, Timothy P. : 583 Hansen, S0ren Friis : 683 Goergen, Marc : 595 Hansmann, Henry B. : 1, 254, 259, 261, Gold, Michael : 111 1 588, 589, 589, 701 Goldfus, Marc B. : 842 Harbrecht, Paul P. : 355 Goldman, Berthold : 1039 Harding, Robert J. : 194 Goldman, Michael D. : 330 Hare, Jonathan : 1174 Goldsmith, Jack L., III : 149 Harrington, G. : 343 Gordon, Jeffrey N. : 661, 592 Harris, Benjamin, Jr. : 408 Gordon, Roger H. : 227 Hart, Henry M. : 101 Goshen, Zohar :2 Hartmann, Michael : 489 Gourevitch, Peter A. : 499 Hartnett, Maurice A., III: 662 Grandy, Christopher : 368, 369, 371 Harvey, Richard S. : 771 Gravir, Gaute Simen : 1035 Hay, Peter : 655 Gray, J. : 1079 Hayakawa, Yoshihisa : 170 Grechenig, Kristoffel : 1080 Hayek, Friedrich A. : 27 Green, Mark : 429, 790 Hazen, Thomas L. : 564 Greenfield, Kent : 152, 533 Heine, Klaus : 42, 67, 900 Greenwood, Daniel J.H.: 532 Heinrich, Gregor C. : 950 Grennwood, Daniel : 467 Hellwig, Martin F. : 426 Griffith, Sean J. : 298, 696 Helpman, Elhanan : 496 Grippo, Theodore W. : 611 Heminway, Joan MacLeod: 818 Grosscup, Peter S. : 512 Henderson, Gerard C. : 141 Grossman, Gene M. : 496 Henning, Joel F. : 838, 858 Grossman, Richard L. : 430 Henning, Peter J. : 285 Grubb, George G. : 206 Herman, Edward S. : 16 Grundfest, Joseph A. : 287 Heron, Randall A. : 735 Grundman, Stefan : 290, 650 Hertig, Gerard A. 310, 593, 877, Giltt, Tilmann : 1062 894,906,910,911,981 Guzman, Andrew T. : 64, 96, 275, 313, Heyman, Kurt M. : 672 314,531,860, 1198 Hicks, Andrew : 1118 Gyoshev, Stanley : 22 Hicks, J. William : 311 Hill, Jennifer G. : 279, 1182 H Hinds, Anna-Louise : 1012 Hirsch, Paul M. : 605 H.L.H. : 172 Hirschman, Albert 0. : 30, 32, 34 Hackl, Jo Watson : 751 Hirt, Hans C. : 1165 Haines, Jason : 315 Hisatake, Masato : 554 Halbhuber, Harald : 896 Hobbet, Richard D. : 216 Halen, Ann-Christine : 1021 Hodges, Robert : 1172 Halloran, Michael J. : 189 Hoefler, James M. : 112 Hamdani, Assaf : 277, 391, 706 Hogfeldt, Peter : 989 Hamermesh, Lawrence A.: 545 Holbrook, Reid F. : 270 Hamilton, Robert W. : 289 Holland, Randy J. : 688 Hamlin, Chauncey J. : 765 Holst, Catherine : 1026, 1145 Hammer, Douglas L. : 189 Holzinger, Katharina : 78 Hampton, C. : 962 Hopt, Klaus J. 875, 940, 943, Han, Eric Tak : 232 964,996 Hannes, Sharon : 653 Horn, Laura : 986 Hanrahan, Michael : 665 Hornstein, George D. : 348,513,514,800

92 Hudson, Sidney D. Moore: 767, 768 Kamar, Ehud : 80, 82, 295, 296, Huff, Curtis W. : 336 704, 707 Huff, Michael P. : 260 Kane, Mitchell : 69, 70 Huffcut, Ernest W. : 759, 821 Kaouris, Demetrios G. : 708 Huiskes, Christian R. : 1077, 1108, 1109 Kaplan, Stanley A. : 837, 840 Hulle, Karel Van : 968 Karmel, Roberta S. : 809, 813, 817, 844 Hurst, James Willard : 14, 358 Katz, Wilber G. : 354 Hyman, Allen : 730 Keasbey, Edward Quinton: 132 Hyman, David A. : 265 Keesling, Frank M. : 196 Kellough, William C. : 264 I Kelly, John : 234, 239 Kerber, Wolfgang : 42, 67, 900 Iacobucci, Edward M. : 166, 736 Kershaw, David : 717 lovenko, Michael : 200 Kersting, Christian : 1051, 1162 Isaacs, Elcanon : 134 Kiekebeld, Ben : 1173 Israel, S. : 1076 Kieninger, Eva-Maria : 68 Kim, Elaine : 245 J Kim, Joongi : 5 Kim, Kon-sik : 5 Jackson, Howell E. : 95 King, David N. : 110 Jacobs, Jack B. : 647 Kirchner, Christian : 1167 Jahera, John S., Jr. : 632, 755 Kirsch, Michael S. : 242, 651 Jan Wouters : 890, 897 Kisfaludi, Andras : 43 Jarrell, Gregg A. : 125, 744, 745, 746 Kisfaludi, Andras : 975 Jenkins, Garry W. : 262 Kitch, Edmund : 362, 463 Jennings, Edward G. : 854 Klausner, Michael : 12 Jennings, Richard W. : 534 Klausner, Michael : 161, 549, 559, Jensen, Anne Funch : 995 560, 561, 726 Jensen, Michael C. : 604, 616 Klevorick, Alvin K. : 448, 465 Jing, Yijia : 1193 Kline, Phill : 270 Jitta, Marius Josephus : 692 Klinke, Ulrich : 1024 Johnson, Lyman : 659 Knauss, Robert L. : 459 Johnson, Richard A. : 246 Knill, Christoph : 912 Johnston, Andrew : 1067 Knudsen, Jette Steen : 1009 Jonathan, Macey R. : 127, 481, 482, Kobayashi, Bruce H. : 160 500,502,504,505, 527, 530,623,640,660, Kocaoglu, Kagan : 204, 280 862,989 Koniak, Susan P. : 484 Jones, Renee : 571, 581 Kostel, Mary E. : 528 Jordan, Cally : 252 Kozyris, P. John : 143 Jose Luis Cardenas : 1026 Kraakman, Reiner : 259, 261, 588, 589,644 K Kraakman, Reinier : 1, 18 Krasner, Matthew B. : 222 K.,D.B. : 173 Krave, John P. : 266 Kaal, Wulf A. : 1167 Kristoffel Grechenig : 971 Kades, Eric : 471 Kroeze, Maarten J. : 700 Kahan, Marcel : 549, 560, 561, Krueger, Anne 0. : 475 573,697, 704, 707 Kruse, Mark E. : 192 Kahan, Marcel :9 Kudrle, Robert T. : 226 Kalss, Suanne : 971, 1080 Ktibler, Friedrich : 921 Kama, Sreenivas : 741, 747, 752 Kuehrer, Norbert : 1049

93 Kuhn, Richard D. : 208 Maduro, Miguel Poiares: 673 Kun, Orsolya : 236 Malatesta, Paul H. : 749 Kuran, Timur : 3 84 Mandelkem, I. Paul : 219 Kuykendall, Mae : 523 Mann, James : 240 Manne, Henry G. : 598 L Manning, Bayless : 618, 859 Margolis, Stephen E. : 558 Laity, Eric T. : 225 Margotta, Donald G. : 753, Lamoreaux, Naomi R. : 382 Marie-Agnes Arlt : 971 Lane, Norman Herbert : 210 Mark, Gregory M. : 258, 374, 380 Langevoort, Donald C. : 124, 600, 610, 819 Martin, D. : 1028 Latty, Elvin R. : 186, 409 Martynova, Marina : 595 Lauterfeld, Marc : 1020, 1142 Mashaw, Jerry L. : 111 Lawless, Robert M. : 427, 729 Matsui, Tomoyo : 169 Lee, Ruben : 886 Maupin, Chapman W. : 184 Leeper, W. D. : 182 Mayer, Colin : 737, 738, 739, Leftwich, Richard : 731 976,998 Leleux, Paul : 874 Mayer, Thomas C. : 209 Lempereur, Cl. : 951 McAdams, Richard H. : 713 Lenoir, Noelle : 1113, 1116 McCahery, Joseph A. : 37, 76, 273, 470, Levander, Andrew J. : 217 517, 539,543, 551, 554, 580, 895,906,911, Levy, Beryl Harold : 515 918, 981, 1000, 1073 Lewellen, Wilbur G. : 735 McCallin, Joseph A. : 355 Leyens, Patrick C. : 993 McChesney, Fred S. : 480 Libecap, Gary D. : 372 McDonnell, Brett H. : 562 Licht, Amir N. : 85, 714 McGum, Patrick S. : 626 Liebowitz, Stan J. : 558 McQueen, Rob : 389, 1180 Liman, Arthur : 601 McWilliams, Thomas P.: 753 Lipton, Martin :7 Mc Williams, Victoria B.: 753 Lodge, Martin : 902 Meier-Schatz, Christian: 876 Loewenstein, Mark J. : 703 Melnik, Steven V. : 241 Lofstedt, Ragnar E. : 286 Mendoza, Gary S. : 266 Logan, Walter S. : 785 Menjucq, Michel : 1011, 1097 Lombardo, Bruce D. : 215 Merkt, Hanno : 977, 1104 Lombardo, Davide : 25 Merrick, Dodd, E., Jr : 346, 406 Lombardo, Stefano : 901, 1102, 1106, Metzenbaum, Howard M.: 793 1157 Meussen, Gerard : 1108 Looijestijn-Clearie, Anne: 1039, 1166 Meyers, Marc : 1014 Lopucki, Lynn M. : 424, 431, 432 Miche1er, Eva : 1038, 1043, 1153 Lotstein, James I. : 335 Milhaupt, Curtis J. : 304, 550, 596 Lowenfels, Lewis D. : 806 Miller, Darius : 247 Lowry, John : 337 Miller, Geoffrey P. : 12, 481 Luca, Enriques : 13 Mingers, Susanne : 912 Luce, Kenneth K. : 178, 351 Miwa, Y oshiro : 1196 Lustig, Eric A. : 565 Moberg, Krister : I 078 Mock, Sebastian : 935, 960 M Mofsky, James S. : 357 Macintosh, Jeffrey : 11 87, 1191 Moore, Andrew G. T., II: 621 Macintosh, Jeffrey G. : 1190 Moore, Patrick K. : 266 Mackie-Mason, Jeffrey K.: 227 Morawetz, Victor : 769 MacLean, Charles C., Jr.: 205 Morgan, Chris : 1103 94 Mosby, Speed : 428 Moscow, Cyril : 333 Pagano, Marco : 25 Mosher, James M. : 963 Painter, Richard W. : 1167 Movsesyan, \Tahagn : 932 Palmer, Henry W. : 825 Moyer, Patrick : 811 Pamepinto, Sharon : 619 Mucciarelli, Federico Maria: 1022 Pan, Eric J. : 95 Muchlinski, P. : 1152 Pannier, Matthias : 1062 Mueller, Dennis C. : 928 Parchomovsky, Gideon: 2 Mulder, Wendela : 1110 Paredes, Troy A. : 302 Mulholland, Catherine S.: 464 Parleani, Gilbert : 1058, 1172 Murdock, Charles W. : 414 Parsons, John E. : 852 Murfree, William Law : 86 Pasa, Barbara : 979 Murfree, Wm. L., Jr. : 181 Pasotti, Piero : 1102, 1106 Murphy, Dale D. : 44, 45, 99, 237 Paul P. Harbrecht : 712 Musgrave, Richard : 102 Pelkmans, Jacques : 887 Peltzman, Sam : 283 N Perino, Michael A. : 774 Perotti, Enrico : 26, 509 Nader, Ralph : 429, 790 Peterson, Pamela : 734 Nash, James J. : 238 Picciotto, Sol : 73, 92, 315, 517 Neeman, Zvika : 508 Pinto, Arthur R. : 158, 613 Netter, Jeffry M. : 625, 746, 748, 754 Pistor, Katharina : 300, 552, 900, Neville, Mette : 164, 907 978, 1199 Nicholson, Frederic A .: 211 Pivnick, Robert : 334 Nilsen, Andre : 1007 Plambeck, Charles Thelen: 201 Noam,EliM. : 107, 108 Polanyi, Karl Polanyi : 281 Noll, Douglas E. : 190 Posner, Richard A. : 106, Noll, Robert G. :526 Poulsen, Annette B. : 625, 745 Noronha, Gregory : 427, 729 Pound,John : 524 Nunnallee, Walter H. : 221 Pound, Roscoe : 654 Powell, Michael J. : 548 0 Prentice, Dan : 903 Prentice, Ezra Parmalee : 763, 766, 853 Oates, Wallace E. : 35, 104 Procaccia, Uriel : 969 O'Donnell, Pierce : 773 Prussing, Eugene E. : 823 Oesterle, Dale A. : 622 Pugh, William : 632, 755 Ogus, Anthony I. : 24 Oh, Peter B. : 90 Q O'Hara, Erin A. : 163, 529 Oldham, J. Thomas : 191 Qian, Yingyi : 117 Olson, Mancur, Jr. : 4 7 Quillen, William T. : 665, 666 Omar, Paul J. : 1032 Quinn, Linda C. : 787 Oplustil, Krzysztof : 1099 Quintana, Jason M. : 423 Ottenbreit, Kenneth G.: 1189 R

Raaijmakers, M.J.G.C. : 949 Ozkok-<;ubuk9u, Dilek : 1072 Raaijmakers, Theo : 648, 1096 Ozkorkut, Korkut : 1072 Radwan, Arkadiusz : 1119 Rajak, Harry : 1048 p Ramage, B. J. : 394

95 Ramirez, Steven A. : 799 Rundans, Patrick : 305 Rammeloo, Stephan : 89, 1037, 1045 Rutledge, Wiley B., Jr. : 407 Ramsay, Ian M. : 122 Ryan, Patrick S. : 1025, 1030 Ramseyer, J. Mark : 1196 Ryngaert, Cedric : 1015 Randolph, Carman F. : 761 Ryngaert, Michael : 748, 754, 797 Ratner, David L. : 119 Rehnquist, William H.: 664 s Reid, Alan S. : 972 Renneboog,Luc : 595,998, 1001 Saito, Jun : 554 Reuschlein, Harold G. : 835, 836 Salacuse, Jeswald W. : 716 Revesz, Richard : 118 Sale, Hillary A. : 812 Ribstein, Larry E. : 159, 160, 163, Salmon, Pierre : 568, 925 251, 525, 861, 870 Saltoun, Diane L. : 418 Richard W. Jennings : 841 Samuelsson, Per : 989 Richberg, John C. : 783 Sanborn, John B. : 760 Rickford, Jonathan : 1083 Sanders, Pieter : 1074, 1084 Riemer, Pieter : 1016 Sanjai Bhagat : 722 Riley, Thomas C. : 215 Sara D. Kalin : 431 Ringe, Wolf-Georg : 1061 Sasso, Lorenzo : 1117 Robbins, James J. : 772 Saul Levmore : 72 Robert W. Hamilton : 375 Schaffer, David S., Jr : 367 Roberts, David Mace : 334 Schall, Alexander : 1168 Robinson, Thomas A. : 218 Schanzenbach, Max : 308 Roch, Soler : 1093 Schindler,ClemensP. : 1162, 1175, 1178 Rock, Edward : 69, 70, 573 Schmidt, Hartmut : 879 Rock, Edward B. : 668 Schmitthoff, Clive : 938 Rodden, Jonathan : 116 Schon, Wolfgang : 79, 1066 Rodriguez, Daniel B. : 114 Schiiller, Margot : 1192 Roe, Mark J. : 297, 397, 497, Schumann, Laurance : 617, 750 569,574,576,577,635 Schwab, Robert M. : 35 Roe, Mark J. : 8, 10, 11 Schwartz, Donald E. : 789, 846, 847 Romano, Roberta : 396, 441, 442, Schwartz, James R. : 266 444,445,449,450,451,453,457,469, 553, Schwert, G. William : 638 584,620,634,636,637, 721, 722, 732, 867, Schwimbersky, Sandra: 1111 868 Seer, Roman : 698 Renfeldt, Thomas : 117 6 Segal, Uzi : 969 Rose, Caspar : 724 Seligman, E. Joel : 791 Rose, Paul : 1144 Seligman, Joel : 360, 429, 566, 796, 808, Rose-Ackerman, Susan: 105, 109, 111, 116, 810,815,816,849 547 Sester, Peter : 1026, 1169 Rosen, Sherwin : 516 Sever, Martina : 917 Rosenthal, Donald B. : 112 Sharon Pamepinto : 626, 733 Roth, Wulf-Henning : 1022, 1044, 1158 Shaviro, Daniel : 75 Roussos, Alexandros : 1050 Sheppard, Hale E. : 229 Rowley, Charles K. : 483 Shields, John H. : 331 Ruback, Richard S. : 604 Shughart, William F., II : 284, 365, 479 Rubenfeld, Jed : 612 Siebert, Horst : 23 Rubin, Paul H. : 488 Siems, Mathias M. : 597, 695, 980, Rubin, Seymour J. : 855 1005, 1148 Ruder, David S. : 802 Singer, Lawrence E. : 263 Rudolph, E. George : 177 Sitkoff, Robert H. : 308, 456 96 Skeel, David A., Jr. : 652, 671, 680, 688 Timmerman, Levinus : 702 Skog, Rolf : 997 Timmerman, Vino : 699 Smedresman, Peter S. : 200 Timmermans, Christiaan W. A. : 945, 961 Smith, Herbert Knox : 822 Tollet, Nicolas : 1107 Sommer, Alphonse A. Jr.: 807 Tollison, Robert D. : 284, 365, 479 S0rensen, Karsten Engsig : 1029 Tommasino, Pietro : 506 S0rensen, Karsten Engsig : 164 Trachtman, Joel P. : 91, 93, 94, Sowards, Hugh L. : 357 Trofimenko, Martha B. : 463 Spector, Adam B. : 626 Trager, Tobias H. : 253, 1031 Spindler, Gerald : 291 Tsetsekos, George P. : 756 Springael, Brent : 1081 Tuchinsky, Dmitry : 1170 Squire, Richard : 259, 261 Tullock, Gordon : 4 73 Stapleton, Walter K. : 325 Tung, Frederic : 153, 155 Steele, Myron T. : 298 Tuytschaever, Filip : 955 Steffens, Lincoln : 401 Stein, Eric : 477, 657, 936, u 937, 1034 Steinberg, Marc I. : 458 U gliano, Arianna : 1071 Stephen P. Ferris : 729 Urofsky, Melvin I. : 363 Stevens, Matt : 154 Stevens, Robert S. : 784 v Stewart, Samuel B. : 187 Stigler, George : 282 Vaccaro, Enrico : I 063 Stigler, George J. : 48, 49 Vagts, Detlev : 939 Stith, Clark D. : 885 van Apeldoorn, Bastiaan : 986 Stoke, Harold W. : 341 van der San gen, Ger : 1110 Stout, Lynn A. : 301, 723 Vance, William R. : 4 72 Strine, Leo E., Jr. : 455, 647, 686, Veasey, E. Norman : 390, 452, 518, 866,869 663, 669, 674, 677, 679, 687, 690, 691, Strong, Frank R. : 100 864, 865, Sturmfels, Kai F. : 1171 Ventoruzzo, Marco : 924, 1010, 1017, Styrsky, Vit : 77 1019, 1195 Subramanian, Guhan : 728, 757 Vermeulen, Eric P. M. : 66, 514, 551, 554, Sun, Jeanne-Mey : 887 918, 1073 Sunder, Shyam : 41 Villiers, Charlotte : 954 Surkin, Elliot M. : 214 Voelkel, G. Hanse : 136 Sykes, Alan 0. :38 Vogel, Steven K. : 81 Szewczyk, Samuel H.: 756 Volpin, Paolo : 509 von Solinge, Gerard : 988 T von Thadden, Ernst-Ludwig : 26 Voss, J. David : 179 Teichmann, Christoph: 1086, 1099, 1112 Vossestein, Gert-Jan : I 064 Teresa, Maria : 1093 Testani, Rosa Anna : 7 51 w Teubner, Gtinther : 958 Thacher, Thomas : 832, 851 Wagner, Gerhard : 915 Thommes, Otmar : I 092 Wagner, Hannes : 739 Thompson, Robert B. : 570, 575, 582, Wagner, Helmut : 299 607,645, 776, 812 Wahal, Sunil : 639, Thomsen, Steen : 511, 591 Wald, John K. : 651 Tiebout, Charles M. : 28 Walker, John E. : 1189

97 Walkling, Ralph A. : 749 Wallis, John Joseph : 381, 385, 387 Xanthaki, Helen : 1036 Walton, Alfred G. : 3 1 Wang, Margaret : 718 y Warren, Edward H. : 83 Warren, Manning G., III: 775, 942 Yablon, Charles M. : 393 Watkins, Myron W. : 770 Yadlin, Omri : 498 Watt, Horatia Muir : 165 Young, Gordon G. : 850 Weatherhill, Stephen : 959 Weber-Rey, Daniela : 934 z Wehlau, Andreas : 107 5 Wei, Yuwa : 378, 379 Zampa, Gian Luca : 999 Weingast, Barry R. : 117, Zenner, Marc : 639 Weintrop, Joseph : 741, 747, 752 Zhang, Jianwei : 1193 Weiss, Elliott J. : 631, 740, 743, 795 Zigman, David B. : 197 Werlauff, Erik : 1176 Zillmer, Raymond T. : 402 Werlauff, Erik : 945, 948, 1036, Zimmer, Daniel : 88, 1037, 1164 1042, 1089, 1095, 1101 Zumbansen, Peer : 156, 305, 926 Werner, Walter : 361 Wessels, Bob : 1024 West, Mark D. : 63 Westrup, Vincent W. : 345 Whincop, Michael J. : 676 White, Lawrence J. : 740, 743 White, Michelle J. : 293 Wier, Peggy : 741, 747 Wildasin, David E. : 274 Wiles, Kenneth : 639 Wilgus, Horace L. : 785, 826, 827, 828,829 Wilkins, David B. : 519 Willems, Huub : 693 Williams, James W. : 46 Williamson, Oliver E. : 33, 115, 468 Williston, Samuel : 338 Wilson, John D. : 71, 74, 274 Winer, Stanley L. : 39 Winter, Jaap : 1087 Winter, Ralph K. : 433, 435, 437, 438,439,440,443,461,486 Wolcott, James L. : 347 Wolff, Lutz-Christian : 1194 Wolfson, Nicholas : l 5 Woolcock, Stephen : 889 Wooldridge, Frank : 1156 Wouters, Jan : 1020 Wu, Jeffrey Y. : 871 Wymeersch, Eddy : 97, 590, 992, 1023, 1052, 1055, 1056, 1069, 1140 x 98