From First-Best to Least-Worst: Emerging Threats to Delaware’s Dominance that the Legislature Can’t Fix

Jonathan R. Macey

It is generally assumed that legislatures can easily reverse judicial decisions. This Article explores the effects of a recent effort by the Delaware legislature to reverse the effects of certain controversial judicial decisions by the state’s Court of Chancery and Supreme Court, finding that undoing the perceived harm caused by judges is quite difficult. My focus is on the Delaware legislature statutory reforms aimed at shoring up Delaware’s dominant position in the jurisdictional competition for corporate charters. I identify seven discrete factors that are conspiring to thwart the legislature’s recent effort to undo the judicial decisions that the state’s governor and legislature fear will undermine the state’s ability to attract and retain the corporate chartering business. 

The factors that I identify include the staunch opposition to the recent legislation on the part of the very judges who are charged with interpreting and applying it. Also relevant is the decline in the prestige corporations historically derived by incorporating in Delaware. Chartering in Delaware no longer constitutes virtue-signaling because it is no longer viewed by corporate law intelligentsia to have the most advanced, state-of-the art law. More recently, however, the academic community criticized the new Delaware statutes and the process leading up to their passage. 

Also, interest group politics prevented the legislation from addressing Delaware judges’ reputation for tolerating strike suits and frivolous litigation and for awarding very large attorneys’ fees to plaintiffs’ lawyers in cases that do not produce any discernible benefits to the corporation or its shareholders. Another problem that the legislature cannot solve is that various members of the Delaware judiciary have negative normative views of Delaware’s most important constituencies: corporate managers, directors, founders, and high-profile CEOs. These decision-makers are understandably reticent about incorporating in a state where their decisions will be made by judges who do not value their contribution to the success of their companies. A fifth threat that the legislature cannot address is the erosion of the traditional “respectful coexistence among the branches of government” that long characterized Delaware’s legal environment. The final two problems that the legislature cannot fix are that corporate law has become increasingly irrelevant because it is being displaced by private contracting. Finally, to the extent that corporate law has not been replaced by contract law, statutes are replacing judge-made law as both the primary, and the preferred source of corporate law. The legislature’s attempt to replace judicial decision-making with statutory rules undermines Delaware’s historical competitive advantage, which was the perceived superiority of its judges. 

Strategy’s Bitcoin Treasury Model: Corporate Omphaloskepsis, Polypharmacy of Risk, and Shareholder and Societal Welfare

Henry T. C. Hu

Strategy Inc (MSTR), formerly MicroStrategy Incorporated, styles itself as the first and largest “bitcoin treasury company” (BTCo). MSTR essentially produces no goods or services and generates no operating cash flow. Yet by early 2025, its share price had risen 27-fold in under five years, a 110% annualized return—exceeding that of every S&P 500 stock. Corporations worldwide began imitating its BTCo model. With 4% of all outstanding bitcoins, MSTR is the largest known institutional holder. In 2025 it issued more equity capital than any other U.S. company. 

This Article is the first academic work on the law and economics of the MSTR model. It introduces two concepts: “corporate omphaloskepsis,” which captures the model’s ends and means, and “polypharmacy of financial risk,” which frames some key consequences for shareholders. Together, they help characterize a fundamentally different kind of public company. MSTR’s path to shareholder wealth maximization departs from longstanding financial and legal understandings. Where the animating engine of ordinary public companies rests on producing goods and services, MSTR’s rests largely on repeatedly issuing shares at a premium over the per share net asset value (NAV) of its bitcoin holdings, with proceeds immediately deployed to buy more. Management focuses on these issuances and purchases, on sustaining and, ideally, expanding the share price premium, and on promoting bitcoin. 

The Article calls this “corporate omphaloskepsis”: the firm gazes inward at two numbers—bitcoin’s price and its share price’s premium over NAV—with the outside world mattering only insofar as it moves them. So long as the premium holds, each issuance is arithmetically accretive to NAV—an internal arbitrage in which new shareholders subsidize existing ones. MSTR’s bitcoin advocacy works on two margins: it lifts its core asset’s price and, by burnishing the case for the amplified bitcoin exposure MSTR shares offer, helps sustain the premium. Unlike ETFs, whose authorized participant mechanism tethers share prices to NAV, MSTR shares usually traded at a substantial premium—a deviation central to its animating engine. 

A sharp break in crypto assets in late 2025 sent MSTR shares plunging from their alltime high, while the premium contracted markedly. Bitcoin, MSTR’s share price, and the premium have recovered from their 2026 lows but remain far below prior peaks. 

Beyond offering an analytical framework for dissecting a new kind of public company, the Article’s contributions are threefold. First, it shows that MSTR’s core ends and means are unique. Its ends are an extreme “financialization” of the shareholder wealth maximization contemplated by corporate law and corporate finance theory. It’s essential means depart from ordinary public company logic: the animating engine runs on share price premiums and bitcoin purchases. Sustaining the premium also requires other sui generis managerial tasks: e.g., amplifying bitcoin exposure, promoting bitcoin, and catering to investor heterogeneity with unusual intensity. The Article also explores puzzles in identifying the share price at which the engine functions, including a “Fulcrum Ratio” concept and competing methods for calculating “mNAV” (multiple of share price to per share net asset value). 

Second, the Article identifies novel shareholder protection and societal welfare concerns. Shareholders confront a “polypharmacy of financial risk” more complex and harder to assess than its medical namesake. A range of hazards—bitcoin’s volatility, MSTR’s status as a bitcoin whale, the amplified exposure embedded in its capital structure, and substantive, process, and regulatory risks associated with MSTR’s animating engine—are reflexively coupled. Each hazard reshapes the others, so their interaction is endogenous and shifting rather than fixed. The composite risk exposure is profoundly idiosyncratic and may be closer to Knightian uncertainty than calculable risk. MSTR’s unusually heavy retail ownership and the missives seemingly encouraging ill-diversification exacerbate the concerns. The societal concerns center on economic growth. MSTR’s advocacy that public companies redirect securities issuance proceeds from product development to bitcoin accumulation cuts against the innovation on which long-run economic dynamism depends. 

Third, the Article proposes responses. Its proposals are not predicated on MSTR or bitcoin being Ponzi-like, meme stock-like, or otherwise suspect. Instead, these proposals are grounded in a principle of neutrality between the MSTR model and the ordinary public company model. Existing private ordering and federal disclosure rules have inadvertently favored the former, boosting demand for MSTR shares. On the private ordering side, the MSCI Global Investable Market and Nasdaq-100 indexes—primarily meant to capture only operating companies—nonetheless include MSTR due largely to outmoded eligibility criteria and MSTR’s legacy, relatively insignificant, software business. The inclusion forces purchases by every investor tracking these benchmarks. On the regulatory side, the Securities and Exchange Commission (SEC) “Management’s Discussion and Analysis” (MD&A) requirements call for public companies to offer thoughtful management assessments of their prospects, including the risks and uncertainties associated with key business drivers. As drafted, it is unclear whether the MD&A reaches the mNAV driver of BTCos like MSTR. As for the indexes, moving toward neutrality warrants serious consideration. As for the SEC, it should determine the circumstances in which the MD&A applies to the mNAV.  

An Afterword briefly outlines some of the changes to MSTR’s functioning announced on May 5, 2026. 

The New Political Economy of Delaware Corporate Lawmaking

Marcel Kahan and Edward Rock

2024 and 2025 marked a breakdown in Delaware’s traditional approach to corporate lawmaking, a breakdown that resurrects the longstanding debate over whether Delaware should function as the de facto promulgator of national corporate law. In this Article, we argue that the breakdown in the Delaware process is a result of changes in the capital and legal markets. 

The key capital market change is the rise of dual-class controlled companies that can credibly threaten to reincorporate from Delaware and have governance demands that traditional corporate law doctrine cannot easily accommodate. The key legal market change is increased competition among Delaware lawyers resulting from an increase in the size of Delaware law firms, from an increase in the number of Delaware law firms, and from more out-of-state law firms opening Delaware offices. Together, these changes make it more difficult for Delaware lawyers to resist the pressure to accommodate demands from controllers, controlled companies and their out-of-state law firms even if accommodating these demands is adverse to the long-term interests of Delaware and of Delaware lawyers as a group. 

To address these changes, we propose replacing the current “Corporation Law Council” with a legislatively created “Corporation Law Commission” that prioritizes the creation of a balanced and technically excellent corporate law over making changes that serve immediate client interests. The Commission’s membership would incorporate greater representation from other stakeholders and include fewer Delaware lawyers engaged in active practice. Its procedures would establish mechanisms to enhance transparency and encourage input. By increasing the legitimacy of Delaware’s statutory lawmaking process, such changes would help Delaware withstand national scrutiny, external competition, and the prospect of federal intervention. 

Back to Basics: Delaware’s Genius of Simplicity

Lori W. Will