I present evidence consistent with the theory that Delaware corporate law improves firm value and facilitates the sale of public firms. Using Tobin's Q as an estimate of firm value, I find that Delaware firms are worth significantly more than similar firms incorporated elsewhere. The result is robust to controls for firm size, diversification, profitability, investment opportunity, industry, managerial ownership, and unobservable firm heterogeneity. Delaware firms are also significantly more likely to receive takeover bids and be acquired. Results are robust to controls for endogeneity.
Journal of Financial Economics – Elsevier
Published: Dec 1, 2001
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