This article provides an overview of key concepts of economic analysis of corporate law.

The cornerstone thesis of corporate law and economics goes back to neoclassical economic idea that regardless initial property rights distribution contracting parties may achieve effective agreement if transactional costs are neglect, thus the firm is a legal device which helps to reduce the cost of contracting. Therefore, contractarian theory of the firm has become predominant concept in legal theory and shaped the debate on who are the ultimate beneficiaries of the governance of the firm and how to define optimal default rules they need. The paper also analyzes an agency problem, then conflicts between various corporate constituencies, mostly shareholders and creditors, as well as it outlines efficient market hypothesis and how this concept was incorporated into economic analysis of corporations. The article concludes by economics of mergers activity and regulatory competition between various corporate jurisdictions with a number of normative implications that economic analysis may provide for legal policy.

Keywords: economic analysis of law, law and economics, contractarian theory, social cost, agency problem, efficient capital market hypothesis, regulatory competition

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