Want To Reduce The Costs Of Controlling Cheating By Corporate Agents? Paper Suggests Incorporating In Nevada

Last month, I mentioned a recent article by Professor Michal Barzuza which described Nevada as applying ”a strikingly lax corporate law to its corporations”. Michal Barzuza, Market Segmentation: The Rise of Nevada as a Liability-Free Jurisdiction, 98 Va. Law Rev. 935 (2012). Now, Professor Bruce Kobayashi and the late Professor Larry Ribstein have published an article that suggests that while Nevada’s law may be lax, it is not “suboptimally lax”. They suggest that firm managers aren’t choosing Nevada so that they can take advantage of these lax standards to cheat. Rather, they speculate that firms may incorporate in Nevada so that they can reduce their costs of controlling cheating. In other words, the rational decision might be to trade the higher cost of an increased risk of cheating for the lower costs of controlling cheating.

If you happen to be interested in the corporate law of Nevada, I can think of no better resource than my book, Bishop & Zucker on Nevada Corporations and Limited Liability Companies.

 

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Allen Matkins Leck Gamble Mallory & Natsis LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×