For a century, Delaware has dominated American corporate law by securing incorporations from most public companies.  This market share made Delaware law a common language among American business lawyers and law professors.  Outsize attention to Delaware leaves other states, like Nevada and Texas, poorly understood. Today, confusion about the law drives problems in the market for corporate law.

For decades, academics have debated whether states competing with each other for company incorporation and adjudication revenue generates a race to the top or to the bottom.  Critics have called Delaware a “pygmy among the 50 states” and argued that it “denigrates national corporate policy as an incentive to encourage incorporation within its borders, thereby increasing its revenue.”  We believe that the better view is that state competition improves corporate law because America’s vibrant capital markets discipline this competition.  Investors decide whether to buy stock, and companies pick states that allow them to maximize efficiency.

Of course, Delaware may not always hold the crown.  Today, public companies worry that the state no longer offers the best arrangement.  Cornerstone Research documented a “substantial increase” in the value of lawsuit settlements arising out of corporate deals, from $110 million in 2019 to over $600 million in 2024. Another academic study showed that Delaware offers plaintiffs’ lawyers outsize attorney-fee awards relative to litigation risk levels.  Meanwhile, Delaware’s court docket has seen an ever-increasing number of cases in recent years.  Meanwhile, companies going public have begun to incorporate in other states with increasing frequency.  Delaware’s own annual figures reveal a significant drop in the percentage of companies opting for Delaware incorporation for initial public offerings.

Yet if a company is  unhappy with Delaware, where can it go and how does it make that decision?  Today, Nevada and Texas are the most prominent alternatives, offering predictable statutory frameworks that allow companies to plan transactions and resolve disputes efficiently.

Nevada has aimed to reduce litigation uncertainty while preserving liability for serious misconduct with a statutory business judgment rule. It has launched dual-track reforms to improve its adjudication of business law cases.  Nevada law does not eliminate fiduciary duties or make shareholder litigation impossible.  In fact, several Nevada companies have paid multi-million-dollar settlements to resolve disputes in recent years, showing that meaningful liability can attach in cases of real misconduct.

Texas has pursued a grand strategy to become the most business-friendly state in the nation, and corporate law reforms are a big part of that effort. The state has created specialized business courts, enacted laws to provide greater predictability for directors and officers, and supported the launch of the Texas Stock Exchange. Companies headquartered in Texas, including Tesla, SpaceX, ExxonMobil, and Dell, have either already moved or proposed moving their legal domicile to Texas.

The differences involve more than just litigation risk. They reflect competing visions of corporate governance. Delaware relies heavily on equitable review and broad judicial discretion. Texas and Nevada emphasize statutory rules and private ordering. We can debate what system works better, and directors caught in the gears of Delaware’s equitable machinery have their own views. Ultimately the discussion needs accurate information about how these competing systems operate.

Sadly, the discussion now generates confusion, and Delaware may retain its lead in part because of overstated claims about other states.  Some academic work about Nevada has been posted on this site and appeared elsewhere despite the underlying work containing demonstrably false quotations and mischaracterizations of Nevada law and practice.

Professor Michal Barzuza’s article, Nevada v. Delaware, was featured on the Harvard Law School Forum on Corporate Governance with a post contending that “Nevada courts routinely dismiss cases involving clear conflicts of interest, even when the facts are extreme or outrageous.”  In support, the post and underlying article claimed that a Nevada “trial court found that the executives ‘milked’ the company” and that another “director had “‘completely relinquished his duty.’”  Instead of citing to a Nevada court, the article and post cited to an unpublished Nevada federal district court decision.  The quoted statements, described as “findings,” do not appear in the opinion cited.  The court did not make the claimed findings.

These and other false claims caused Nevada’s governor, other elected officials, and lawyers to join a response highlighting the mistakes to help prevent advisers and institutional investors from comparing states based on false information.  Yet recent coverage from the New York Times amplified the work’s incorrect contention that Nevada law has “effectively eliminated the possibility of shareholder litigation.”

To her credit, Professor Barzuza recently revised her draft and removed the false quotations the response flagged—but the quotations linger on the Harvard Forum. The underlying work still paints an inaccurate picture.  It passes over Nevada Supreme Court cases that sit in tension with her claims and instead relies heavily on an unpublished federal district court opinion.  The article still omits acknowledgement of other Nevada cases or settlements that undercut the core thesis.

No one disputes that Nevada law differs from Delaware or that Nevada offers more durable protection for directors and controlling stockholders than Delaware.  But institutional investors need the full picture about Nevada and Texas, not an overstated critique.

The problem extends well beyond academic debate. Mischaracterizations about competing corporate-law regimes now appear often enough that companies themselves have begun responding in SEC filings. In a 2025 proxy statement seeking shareholder approval to reincorporate in Texas, ExxonMobil devoted substantial discussion to rebutting public claims about Texas corporate law, arguing that shareholders were being presented with inaccurate descriptions of the legal consequences of the move and directing readers to a rebuttal published on this site. Whatever one’s view of ExxonMobil’s position, the episode illustrates the costs of an information environment in which corporations, academics, investors, and the media advance competing legal narratives. Proxy statements should help shareholders evaluate corporate proposals, not require them to referee disputes over basic questions of state corporate law.

The problem is bigger than errant academic work.  Misinformation crowds out accurate information and makes it harder for shareholders to consider corporations’ proposals to exit Delaware on their merits.  Corporations and investors should be cautious about sweeping, overstated criticisms of competing jurisdictions.

Ultimately, boards and stockholders must decide for themselves which state offers the best law for their situation.  But the market for corporate law needs good information to work—not simplistic narratives.  Claims about a race to the bottom are easy to make and sometimes difficult to prove or disprove.  Reality is more complex, and boards and investors should have good information when deciding whether to stay or go.

Benjamin P. Edwards is associate dean for faculty research and development at UNLV’s William S. Boyd School of Law and senior of counsel at Wilson Sonsini Goodrich & Rosati. Professor Edwards writes in his personal capacity.  Carliss N. Chatman is a professor at SMU’s Dedman School of Law. A copy of the Response to Michal Barzuza’s work, “Nevada v. Delaware,” written by Benjamin P. Edwards is available here.