By any reasonable measure, Delaware dominates corporate governance. More than half a million business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 60% of the Fortune 500. Because of a conflict of laws rule called the internal affairs doctrine, "the internal affairs of a corporation are governed by the law of that entity's state of incorporation." As such, Delaware law governs the corporate governance of most important US corporations.
Why Delaware dominates is a complex and controversial question. In an interesting new article, Larry Hamermesh suggests "that the following considerations are dominant: (1) enhancing flexibility to engage in private ordering, (2) deferring to case-by-case development of the law, and avoiding legislation that is prescriptive and proscriptive, (3) avoiding impairment of preexisting contractual relationships and expectations, and (4) most importantly, avoiding legislative change in the absence of clear and specific practical benefits."
