Attitudes towards business and corporate governance

Attitudes towards business vary significantly across political lines, religious denominations, and ethnic groups. We utilize this variation to construct a measure of local business attitudes and show that firms in areas with stronger probusiness attitudes are less likely to incorporate in Delaware and adopt more management-friendly provisions in their corporate bylaws. These findings are further supported by an instrumental variable estimation utilizing data on immigration at the turn of the 19th century. The overall findings indicate that firms in probusiness areas are less likely to provide unconditional protection of their managers through incorporation in Delaware. Instead, they tend to provide protection through more flexible means, such as corporate bylaws.