Semiologia Pierre

NELLCO

NELLCO Legal Scholarship Repository
Harvard Law School John M. Olin Center for
Law, Economics and Business Discussion Paper
Series

Harvard Law School

4-1-2009

Washington and Delaware as Corporate
Lawmakers
Mark Roe
Harvard Law School

Recommended Citation
Roe, Mark, "Washington and Delaware as Corporate Lawmakers" (2009). Harvard Law School John M. Olin Center forLaw, Economics
and Business Discussion Paper Series. Paper 638.
http://lsr.nellco.org/harvard_olin/638

This Article is brought to you for free and open access by the Harvard Law School at NELLCO Legal Scholarship Repository. It has been accepted for
inclusion in Harvard Law School John M. Olin Center for Law, Economics and Business Discussion Paper Series by an authorized administrator ofNELLCO Legal Scholarship Repository. For more information, please contact tracy.thompson@nellco.org.

ISSN 1936-5349 (print)
ISSN 1936-5357 (online)

HARVARD
JOHN M. OLIN CENTER FOR LAW, ECONOMICS, AND BUSINESS

WASHINGTON AND DELAWARE
AS CORPORATE LAWMAKERS

Mark Roe

Discussion Paper No. 637
4/2009

Harvard Law School
Cambridge, MA 02138

This paper can be downloaded withoutcharge from:
The Harvard John M. Olin Discussion Paper Series:
http://www.law.harvard.edu/programs/olin_center/
The Social Science Research Network Electronic Paper Collection:
http://papers.ssrn.com/abstract_id=#######
This paper is also a discussion paper of the
John M. Olin Center’s Program on Corporate Governance.

Washington and Delaware as Corporate Lawmakers
Mark J. Roe
AbstractAmerican corporate law scholars have long focused on state-to-state
jurisdictional competition as a powerful engine in the making of American
corporate law. Yet much corporate law is made in Washington, D.C. Federal
authorities regularly make law governing the American corporation, typically via
the securities law—from shareholder voting rules, to boardroom composition, to
dual class stock,to Sarbanes-Oxley—and they could do even more. Properly
conceived, the United States has two primary corporate lawmaking centers—the
states (primarily Delaware) and Washington. We are beginning to better
understand how they interact, as complements and substitutes, but the
foundational fact of American corporate lawmaking during the past century is
that whenever there has been a bigissue—the kind of thing that could strongly
affect capital costs—Washington acted or considered acting. Here I review the
concepts of the vertical interaction, indicate what still needs to be examined, and
examine one Washington-Delaware interaction in detail over time. Overall, we
cannot understand the governmental structure of American corporate lawmaking
well just by examining the nature, strength,and weaknesses of state-to-state
jurisdictional competition.

Washington and Delaware as Corporate Lawmakers
Mark J. Roe
Table of Contents
I. Introduction ............................................................................................................................... 1
II. The Traditional Model: State-to-State Jurisdictional Competition......................................... 1
III. The Recent Thinking: How Much Competition?................................................................... 3
IV. Washington............................................................................................................................. 5
A. CorporateLaws.................................................................................................................. 9
B. Who Makes Them? ............................................................................................................ 9
C. Definitional Versus Functional: Is it Corporate Law? ...................................................... 9
D. Washington Could Do More ........................................................................................... 10
E. State Awareness?...