The State Competition Debate in Corporate Law

A perennial issue in corporate law reform is the desirability of afederal system. For notwithstanding the invasive growth of regulationby the national government, principally through the federal securitieslaws, corporate law is still the domain of the states. While notwo corporation codes are identical, there is substantial uniformityacross the states. Provisions typically spread in a discernible S-shapedpattern, as one state amends its code in response to another state\u27sinnovation. The revision process is often analogized in the academicliterature to market competition, in which states compete to providefirms with a product, corporate charters, in order to obtain franchisetax revenues. This characterization is the centerpiece of the federalismdebate in corporate law-whether competition, and hence a federalsystem, benefits shareholders. The hero-or culprit-in thedebate is Delaware, the most successful state in the market for corporatecharters