A just-published article by University of Texas Professor Jens C. Dammann takes an empirical look at public company relocation choices. State Competition for Corporate Headquarters and Corporate Law: An Empirical Anaylsis, 80 Md. L. Rev. 214 (2021). As an initial matter, Professor Dammann finds that it is "by no means uncommon" for publicly traded companies to relocate their corporate headquarters. He finds that between 1994 and 2018, about nine percent of all public companies moved their headquarters at least once.
The picture for California is decidedly mixed. In 2018, California ranked #1 in terms of the absolute number of public company headquarters located in the state, providing a home to 675 companies. The bad news is that this represents a nearly 35% decline from the number of corporate headquarters in 1995 when the Golden State hosted 1,031 corporate headquarters. To make matters worse, California ranked 30th among the states during the period 2010-2018 in terms of net relocations as a percentage of the existing number of headquarters. Neighboring Nevada, in contrast, ranked #1 for the same period.
Because Professor Dammann's study covers the period ending in 2018, the data do not reflect the impact of the impact of California's board gender quota law, SB 826, which was enacted in September of that year (unless some corporations moved in anticipation of that law). Nonetheless, Professor Dammann foresees significant implications from California's "real seat" approach to corporate law:
"In the future, states’ efforts to attract or retain corporate headquarters may have a direct impact on state corporate law. For example, some states may shy away from adopting gender quotas or other corporate law norms that aim to protect employees for fear of causing corporations to relocate their headquarters elsewhere."
80 Md. L. Rev. at 222.
The potential that SB 826 might drive corporations to relocate elsewhere was not lost on the California legislature. California Corporations Code Section 301.3(d)(2) requires the Secretary of State to publish an annual report of the "number of publicly held corporations that moved their United States headquarters to California from another state or out of California into another state during the preceding calendar year". The legislature included a similar requirement in AB 979 which was enacted the following year and imposes quotas on directors from "underrepresented communities" (as defined).