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Delaware's Compensation

Michal Barzuza, University of Virginia School of Law

Article comments

forthcoming: 94,3,Va.L.Rev.(May 2008)

Abstract

This article illuminates the interdependence between the structure of Delaware's franchise tax and Delaware's corporate law. It makes three major arguments. First, different franchise tax structures would create different regulatory incentives for Delaware. Second, the current structure of Delaware's franchise tax law is suboptimal. A franchise tax that is sensitive to firm performance would be superior to Delaware's current franchise tax. It would align Delaware's incentives with those of shareholders and induce Delaware to offer corporate law that maximizes shareholder value. It will have this effect even if Delaware faces no competition from other states over incorporations and even if shareholders are passive. Third, Delaware may not have sufficient incentives to reform its franchise tax law. The Article derives policy implications.

Subject Area

Corporations, Law and Economics, Public Law and Legal Theory

Recommended Citation

Michal Barzuza, "Delaware's Compensation" (June 2008). University of Virginia Legal Working Paper Series. University of Virginia John M. Olin Program in Law and Economics Working Paper Series. Working Paper 45.
http://law.bepress.com/uvalwps/olin/art45

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