For four decades after Berle and Means, the assumption that corporate law mattered went largely unexamined. The first sustained challenge — and the framing that has dominated the field ever since — came from William L. Cary in 1974. Cary, writing in the Yale Law Journal, argued that interstate competition for incorporations had produced what later commentators came to call a race to the bottom.3 States, Cary observed, derive substantial revenue from incorporation fees and franchise taxes, and they have therefore raced to attract incorporations by offering the corporate statute most permissive to managers — the lowest standard of accountability to shareholders. Delaware, Cary argued, had won this race by being the most permissive of the fifty states, and the result was an erosion of shareholder protection that no individual state had a private incentive to reverse. Cary's prescription was federal preemption: a uniform federal corporate law that would set a floor below which the state competition could not push.
Three years later, Ralph K. Winter responded in the Journal of Legal Studies with what has become the canonical defense of state competition.4 Winter argued that interstate competition for incorporations selects for higher-quality corporate codes because firms incorporated under poor codes trade at a capital-market discount; the competition Cary feared is therefore the mechanism by which good corporate law is selected. A state that offers managers a license to expropriate shareholders will see firms incorporated there trade at a discount, and the demand for that state's corporate code will collapse. Winter's view — often called the race to the top — became the dominant conventional wisdom for the next two decades, and Cary's federal-preemption prescription faded.
The two papers together set the analytic frame for everything that follows. Every subsequent piece in this literature can be read as an empirical or theoretical contribution to one side of the Cary-Winter debate, or — beginning in 1990 — as an argument that the debate is mis-specified.