Abstract:

Corporate law scholars have long debated whether state competition for corporate charters is a "race for the bottom" or a "race for the top." In this Article, Professor Bebchuk offers an analysis of the dynamics and performance of state charter competition. He shows how the presence of managerial opportunism and externalities may lead states to adopt undesirable corporate law rules. Professor Bebchuk identifies the various issues with respect to which state competition is likely to fail, and he advocates an expansion of federal regulation to govern all of these issues. He also connects the state competition question with the question of contractual freedom in corporate law and argues that many scholars should reconsider their inconsistent views regarding these two questions. Finally, Professor Bebchuk concludes by addressing potential objections to the expansion of federal corporate regulation.