The elimination of director liability and stockholder returns: an empirical investigation

In this paper, the performance of the common stock of Delaware and non‐Delaware firms is examined during the Delaware legislature's debate and approval of an amendment to the Delaware General Corporation Law permitting the elimination of director liability. In addition, stockholder returns surrounding the proxy and meeting dates for certain Delaware firms are examined. Results indicate that Delaware firms performed worse than non‐Delaware firms during the legislative period; however, strong differences between the two groups are not documented.