-
Views
-
Cite
Cite
Jens Dammann, Matthias Schündeln, The Incorporation Choices of Privately Held Corporations, The Journal of Law, Economics, and Organization, Volume 27, Issue 1, April 2011, Pages 79–112, https://doi.org/10.1093/jleo/ewp015
Close - Share Icon Share
Abstract
Exploiting a large new database, this article explores the incorporation choices of closely held U.S. corporations. The majority of corporations in our sample incorporate in the state in which their primary place of business (PPB) is located. However, among the corporations with 1000 or more employees, only about half incorporate in their PPB state, and of those that do not, more than half are incorporated in Delaware. We find statistically significant and robust evidence that corporations from states with judiciaries that are held in low esteem are more likely to incorporate outside of their PPB state. Furthermore, corporations are more likely to migrate away from states where the risk of veil piercing is perceived to be high, that have adopted so-called exculpation statutes, or that offer a particularly generous level of minority shareholder protection.
