JuridicsUSA: Corporate Law: The canonical model is the Delaware legislation, a fading rundown joke — were the matter not so serious

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Business Law Prof Blog (November 21, 2k11)
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Lawyers, Ignorance, and the Dominance of Delaware Corporate Law

I'm a little late getting to this, but Bill Carney, George Shepherd, and Joanna Shepherd Bailey have posted an interesting draft on SSRN: Lawyers, Ignorance, and the Dominance of Delaware Corporate Law. Here's the abstract:

Why does Delaware continue to dominate the market for incorporations even though recent research has shown that the quality of Delaware corporate law has declined substantially? We focus on the rational ignorance of lawyers and investors. Using the results of our survey of lawyers involved in initial public offerings (IPOs) as well as our analysis of companies involved in IPOs, we conclude that lawyers recommend Delaware because they are ignorant about other states’ law. Because Delaware is so
dominant, law schools focus on Delaware corporate law, and a lawyer rationally learns the corporate law only of Delaware and her home state. Regardless of the quality of the law of other states, lawyers will not recommend it because they are unfamiliar with it. Likewise, lawyers recommend only Delaware law because they believe that investors are ignorant of other states’ law.

-Steve Bradford