Most public companies incorporate in Delaware. Is this because they prefer its legal system, or are they simply following a trend? Using the incorporation histories of over 22,000 public companies from 1930 to 2010, I show that firms are more influenced by changes in each other’s decisions than by changes in the law. The analysis exploits an unexpected legal shock that increased Delaware’s long-run share of firms from 30 to 74 percent. I attribute most of this change to a cascading effect in which the decisions of past firms successively influence future cohorts. These decisions are also highly path dependent: in a counterfactual setting without switching costs, firms would be five times more likely to reincorporate in response to a given legal change. I conclude that network effects dominate secular trends in corporate governance.

中文翻译：

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公司治理中的网络效应

大多数上市公司在特拉华州注册成立。这是因为他们偏爱其法律制度，还是只是顺应潮流？利用1930年至2010年间超过22,000家上市公司的成立历史，我证明了公司受彼此决策变化的影响大于法律变化的影响。该分析利用了意料之外的法律冲击，该冲击使特拉华州的长期公司份额从30％增加到74％。我将这种变化的大部分归因于级联效应，在这种效应中，过去公司的决策会依次影响未来的同类。这些决定也高度依赖于路径：在没有转换成本的反事实环境中，公司为响应给定的法律变更而重新注册的可能性将增加五倍。我得出结论，网络效应主导着公司治理的长期趋势。