My Cornell colleague (Ted Eisenberg) and former Civil Procedure teacher (Geoffrey Miller) recently circulated an interesting paper (Ex Ante Choices of Law and Forum: An Empirical Analysis of Corporate Merger Agreements ) arguing, in part, that "Choosing Delaware as the incorporation situs is, effectively, a choice-of-law decision." Excerpts from the abstract follow:
Legal scholars devote much attention to the incorporation puzzle - why corporations so frequently incorporate in Delaware. This paper suggests that focusing on the incorporation decision overlooks a broader but intimately related set of questions. Choosing Delaware as the incorporation situs is, effectively, a choice-of-law decision.
We study a data set of 412 merger and acquisition contracts contained as exhibits in SEC Form 8-K filings over a seven month period in 2002 to assess the decisions the parties have made regarding choice-of-law and choice-of-forum. Although these contracts frequently select Delaware law and Delaware as a forum, there is a relative "flight" from Delaware in this contractual setting. Delaware corporations choose Delaware law less than other corporations choose the law of their state of incorporation. Furthermore, many contracts specifying Delaware law did not specify Delaware as the litigation forum.