PERHAPS the most hackneyed and intractable debate in all of business law concerns the question of whether Delaware has incentives to provide an optimal corporate law, whatever that is. The world seems divided into the race-to-the-topers and the race-to-the-bottomers, with increasing amounts of scholarship piling up on both sides, none of which seems to be convincing the other side or moving policy forward in a meaningful way. When asked to respond to the latest salvo in this battle, I feared more of the same. But after reading Professor Michal Barzuza’s thought-provoking article, Delaware’s Compensation, I am convinced that there are still interesting things to be said about the optimality of the state-as-competitor-for-charters model of modern American corporate governance. I do not find Professor Barzuza’s proposal for making the franchise tax proportional to firm value convincing or necessarily desirable, but, because of the natural check provided by state competition, it is unlikely to do much harm.
Sept 3, 2013
95 Va. L. Rev. Online 49