A Regulatory Competition Theory of Indeterminacy in Corporate Law

1998 ◽  
Vol 98 (8) ◽  
pp. 1908 ◽  
Author(s):  
Ehud Kamar
Keyword(s):  
Corporate Law ◽  
Regulatory Competition ◽  
Competition Theory

scholarly journals Regulatory Competition and the Market for Corporate Law

2020 ◽  
Vol 12 (2) ◽  
pp. 60-98 ◽  
Author(s):  
Ofer Eldar ◽  
Lorenzo Magnolfi
Keyword(s):  
Market Share ◽  
Empirical Model ◽  
Small Firms ◽  
Corporate Law ◽  
Regulatory Competition ◽  
Bonding Hypothesis

This article develops an empirical model of firms’ choice of corporate laws under inertia. Delaware dominates the incorporation market, though recently Nevada, a state whose laws are highly protective of managers, has acquired a sizable market share. Using a database of firm incorporation decisions from 1995 to 2013, we show that most firms dislike protectionist laws, such as anti-takeover statutes and liability protections for officers, and that Nevada’s rise is due to the preferences of small firms. Consistent with the bonding hypothesis, our estimates indicate that despite inertia, Delaware would lose significant market share and revenues if it adopted protectionist laws. (JEL G34, G38, K21, K22, L25, L51)

Fiscal and Regulatory Competition: Theory and Evidence

2002 ◽  
Vol 3 (4) ◽  
Author(s):  
Wallace E. Oates
Keyword(s):  
Empirical Studies ◽  
Regulatory Competition ◽  
Empirical Literature ◽  
Interjurisdictional Competition ◽  
Public And Private ◽  
The Public ◽  
Competition Theory ◽  
Normative Question ◽  
Central Interest ◽  
Potential Impact

AbstractThis paper reviews first the theoretical literature and then the empirical studies of interjurisdictional competition among governments. Of central interest is the normative question of whether fiscal and regulatory competition promotes a more efficient functioning of the public sector or whether it is the source of distortions in the public and private sectors. This is a contentious issue; both the theoretical and empirical literature, while providing some rich insights into the potential impact of such competition, do not give us an unambiguous answer to the general normative question. The concluding section offers the author's thoughts on all this with a leaning towards the view that such competition is, on balance, efficiency-enhancing.

Can Regulatory Competition Improve Contracting Institutions? A Russian Tale of Two Reforms

2017 ◽  
Vol 137 (1-2) ◽  
pp. 121-147
Author(s):  
Janis Kluge
Keyword(s):  
Institutional Development ◽  
Developed Countries ◽  
Regulatory Competition ◽  
Court System ◽  
Competition Theory ◽  
Foreign Law ◽  
Recent Reform ◽  
Incremental Improvement ◽  
The Law ◽  
The Impact

Does competition from foreign jurisdictions undermine or accelerate the development of contracting institutions? Firms in less developed countries are increasingly resorting to foreign legal institutions to safeguard their transactions. Previous research on Russia finds that businesses switch to foreign law instead of trying to improve conditions at home, impeding institutional development in Russia. An alternative prediction is offered by regulatory competition theory: When Russian businesses choose foreign law over Russian law, this could incentivise lawmakers to improve institutions. This paper examines the impact of legal outsourcing in Russia to determine which of these two effects prevails. It differentiates between two pillars of contracting institutions: the quality of the law and the enforcement of the law, i.e., the commercial courts in Russia. Two contrasting case studies of recent reform projects in both pillars are presented. The first one is a success story: Russian contract law was significantly improved and important shortcomings in comparison to English law were removed. At the same time, the judiciary suffered a setback: Incremental improvement of the commercial court system implemented by the Supreme Arbitrazh Court (SAC) was abruptly ended when the Kremlin dismantled the SAC in 2014. The paper concludes that while regulatory competition facilitates the improvement of the letter of the law, it cannot tame the “leviathan.” JEL Codes: D72, F55, F63, K12, P26

The Legal Framework of Regulatory Competition Based on Company Mobility: EU and US Compared

2005 ◽  
Vol 6 (4) ◽  
pp. 741-770 ◽  
Author(s):  
Eva-Maria Kieninger
Keyword(s):  
Environmental Law ◽  
Work Force ◽  
Legal Framework ◽  
Corporate Law ◽  
Regulatory Competition ◽  
Raw Material ◽  
The Real ◽  
Real Seat ◽  
A Minor ◽  
A Company

The phenomenon of regulatory competition, if it exists at all, has at least two prerequisites: On the “supply-side” there must be incentives for corporate law-makers to tailor their products according to the needs of those who decide about the place of incorporation (or re-incorporation). On the “demand-side”, there must be a real and not only a theoretical possibility to choose the applicable corporate law by choosing the place of (re-)incorporation. Whether such a possibility is a real or theoretical one primarily depends on the costs of such a move compared to its benefits. For the decision about the place of the real seat of a company, “good” or “bad” corporate law is only one factor, very often a minor one among other legal and factual determinants such as corporate and other taxes, labor and environmental law, the accessibility of raw material and product markets or the existence of qualified work force. As long as the choice of a certain corporate law is linked to the choice of the real seat of the corporation, freedom to choose the applicable corporate law only exists on a theoretical level. Corporate law can only be chosen as part of a much larger bundle. If, however, companies are able to opt for a corporate seat that is independent from its real seat (and hence at relatively low costs), the freedom to choose the applicable corporate law becomes a real one and that way the second prerequisite for regulatory competition mentioned above will be fulfilled.

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