Macey on Disney

As I noted yesterday, one of the pieces in the new "Ideas" section of the Hofstra Law Review is Jonathan Macey's "Delaware: Home of the World's Most Expensive Raincoat".  Macey's thesis is that the most recent Disney decision, regarding Michael Ovitz's $140 million termination, supports neither the race-to-the-top nor the race-to-the-bottom theory of competition for corporate charters.  Instead, Macey argues the opinion supports the public choice theory propounded by him and Geoffrey Miller -- namely, that Delaware protects corporations but in the process extracts rents for lawyers and other corporate advisors.

Macey's piece adds a lot to the literature on Disney that includes the great forum hosted by the Conglomerate over the summer.  Aside from his main thesis, however, I thought there were two aspects of his commentary that warranted special note.  First, he cites to Larry Ribstein's mock Disney opinion posted on Ideoblog -- further evidence of the blogospheric impact on scholarship.  Second, Macey has particularly harsh words for Mark Roe's theory on vertical competition in the corporate charter arena.  Calling Roe's theory "wholly unconvincing," Macey finds the notion of federal competition for corporate charters to be a complete "non-starter."  Here's a footnote from Macey's analysis:

Roe at one point attempts to bolster his argument by claiming that Delaware feels pressure from Washington not because of threatened competition, but because their feelings are hurt by the criticism they have endured!  Roe writes amusingly that "[t]hough the last serious effort at federal incorporation disappeared some thirty years ago, Delaware players still chafe from the criticism they then endured" decades ago (unsurprisingly, Roe's assertion here is not supported by citation).

Macey's criticism is so definitive that either he's missing Roe's point or one of them is wrong.  Really wrong.  Although only a brief comment, Macey's provocative piece lays down a gauntlet.  It will be interesting to see if anyone picks it up.