Is Corporate Law Nonpartisan?

This Article offers a framework for analyzing the role of political partisanship in corporate law. It begins by showing that there is suggestive evidence of a relationship between political partisanship and the substance of corporate law at the state level. When corporate law materially differs across states, those differences are often predicted by which party controls the state’s government. Political party entrepreneurs also lobby for corporate law reforms at the state level. Yet, Delaware adopts a conspicuously nonpartisan approach to corporate law. It is widely observed that how Delaware makes corporate law—from its constitution, to its legislature, to its judiciary—is unusual. It is designed to insulate that law from political partisanship. More surprisingly, this began when Delaware first became a leading home to incorporations a century ago. In fact, the same thing was true of New Jersey during its brief period of prominence before Delaware. Why? We suggest that the answer relates to corporate law’s central debate regarding the “market for corporate law.”