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105 Harv. L. Rev. 1435 (1991-1992)
Federalism and the Corporation: The Desirable Limits on State Competition in Corporate Law

handle is hein.journals/hlr105 and id is 1455 raw text is: VOLUME 105 MAY 1992 NUMBER 7 HARVARD LAW REVIEW I FEDERALISM AND THE CORPORATION: THE DESIRABLE LIMITS ON STATE COMPETITION IN CORPORATE LAW Lucian Arye Bebchuk TABLE OF CONTENTS PAGE I. THE STATE COMPETITION QUESTION ....................................... 1442 A. Factual Background ................................................... 1442 B. Existing Theories of State Competition ................................... 1444 r. The Race for the Bottom ............................................ 1444 2. The Race for the Top ................................................ '445 3. The Race for Predictability and Stability .............................. 1446 C. Empirical Evidence .................................................... 1448 D. What States M aximize ................................................. 1451 E. Toward a New Theory ................................................. 1455 I. STATE COMPETITION AND MANAGERS' OPPORTUNISM ......................... 1458 A. The Managerial Opportunism Problem ................................. 458 x. The Centrality of Reincorporation Decisions ........................... 1458 2. Reincorporations and Managers ...................................... 1459 B. Significantly Redistributive Issues ....................................... 1461 x. Market for Corporate Control ......................................... 1462 2. Managerial Labor M arket ............................................ 1463 3. Market for Additional Capital ........................................ 1465 4. Product M arket .................................................... 1466 5. Conclusion ......................................................... 1467 C. Issues that Directly Affect the Strength of Market Discipline ................ 1467 D. The Need for Shareholder Vote to Reincorporate .......................... 1470 r. The Move May Increase Shareholder Value Overall ..................... 1471 2. Shareholders May Be Imperfectly Informed ............................ 1472 3. The Move May Be Tied to Another Measure ........................... 1475 4. Conclusion ......................................................... 1475 E. Companies with a Dominant Shareholder ................................. 1476 F. Initial Incorporation Decisions .......................................... 1478 z. A World with Only Initial Incorporations .............................. 1478 2. A World with Both Initial Incorporations and Reincorporations .......... 1481 G. Conclusion: Managers' Opportunism and the Shortcomings of State Competition ..................................................... 1483 '435