An enduring inquiry for American corporate law scholars is why the small state of
Delaware dominates corporate chartering in the United States. Several theories explain
the result. I add another partial explanation: size alone makes Delaware attractive to
reincorporating firms by making the state’s corporate law more important to the
American economy ─ and corporate interest groups ─ than that of other states. Any
single state with a small number of incorporations could disrupt their firms’ corporate
structures without inducing any repercussions in Washington. But Delaware ─ or really
its corporate law ─ is “too big to fail.” Damaged players in other states would be unable
to enlist Washington to reverse the result. Nor would the low volume players be wary of
Washington’s attention and the possibility of it over-reacting if a major corporate issue
reached its agenda. Delaware, though, as home to about half of the American corporate
economy, could not seriously disrupt American business without repercussion.