Skip to content

Mark J. Roe, Delaware's Shrinking Half-Life, 62 Stan. L. Rev. 125 (2009).


Abstract: A revisionist consensus among corporate law academics has begun to coalesce that, after a century of academic thinking to the contrary, states do not compete head-to-head on an ongoing basis for chartering revenues, leaving Delaware alone in the ongoing interstate charter market. The revisionist view pushes us to consider how free Delaware is to act. Where and when would it come up against boundaries, punishments, and adverse consequences? When do other states (and Washington) constrain Delaware? Recent state corporate lawmaking helps us to define those boundaries in terms of potential state competition and to see that the critical actors are not other states’ lawmakers directly, but Delaware’s own corporate constituents who, if disgruntled, can induce other states to enact new laws. Moreover, analysis of previously unassembled chartering revenue data from Delaware’s Secretary of State’s office displays a vital dimension of state competition, once thought to be relatively unimportant, but that’s becoming increasingly powerful: Delaware’s tax base is eroding, and it’s eroding faster in the past decade or so than ever. Delaware must move ever faster to replenish that erosion. The dynamism of American business interacts with even a lackluster state-based corporate chartering market to put powerful pressure on Delaware, whose business base is persistently eroding as firms merge, close, and restructure.