Recent Scholarship of Note: The Market Value of Partisan Balance

Does having a politically balanced judiciary help maintain Delaware's dominance?

I occasionally like to highlight recent corporate law and governance scholarship that catches my eye. I was very impressed by The Market Value of Partisan Balance, by Brian D. Feinstein and Daniel J. Hemel (published in the Northwestern University Law Review, Vol. 119, No. 5) empirically investigates whether Delaware’s constitutional requirement for a politically balanced judiciary contributes to the value of corporations incorporated in the state.

It is well accepted that the expertise of the Delaware courts—especially the Delaware Chancery Court—is a major factor in preserving Delaware’s dominant position as the state of choice for incorporating businesses. Somewhat less attention has been paid to the role, if any, played by Delaware’s constitutional requirement of partisan balance on the courts. As a result of that requirement, even though Delaware has been a solidly blue state for quite a while, its judiciary remains roughly equally divided between the parties. Does that matter?