Download or read book The Influence of Industry Characteristics on Corporate Charters and Bylaws written by Robert L. Kieschnick and published by . This book was released on 2014 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: The corporate charter is a contract between the firm and the state. Prior literature on contracts suggests three primary motives for contracting: risk shifting, incentive alignment, and transaction cost minimization. We argue that the characteristics of the industry within which a firm operates should influence the design of corporate charters/bylaws because firms within an industry face similar risk shifting, incentive alignment, and transaction cost concerns, and so similar internal control and change in control concerns. Using data on a sample of U.S. corporations, we find evidence that: (1) there is substantial variation in governance provisions across industries; (2) the influence of selected industry characteristics differ across provisions; and (3) charter provisions cluster according to the industry characteristics that influence their incidence, which explains correlations between provisions within industries.