107 Iowa L. Rev. Online 136 (2022)

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Abstract

This is a Response Essay to William Moon’s Article, Delaware’s Global Competitiveness, in which I add to the debate about why issuers headquartered in jurisdictions such as China choose not to incorporate in Delaware when they go public in the United States. Using hand-collected data on foreign issuer IPOs, I show that the market for these transactions is highly dependent on specialists working at a small number of American law firms. These firms form an intriguing new section of the transactional bar. Understanding the role played by these specialized attorneys is essential for seeing the fuller picture of foreign issuer IPOs. These lawyers familiarize their foreign clients with American laws and regulations, partner with local law firms in the issuer’s home country, help issuers incorporate in a suitable jurisdiction, and affect the company’s corporate governance at the time of the IPO by choosing which American stock exchange rules they adopt. The lack of a global convergence toward a standard model of corporate law is surely linked to the business model and local institutions faced by companies. However, it is also the product of deliberate choices made by lawyers working to reduce transaction costs for their clients.