Organizational Form Coexistence: Stock and Mutual Financial Firms

Remmers, Barbara

doi:10.2139/ssrn.402341

Cited by 2 publications

(2 citation statements)

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“…However, the control right in savings banks is illiquid, since it is tied to the customer status. Customers must be compensated for this illiquidity, and Remmers (2003) hypothesizes that the cost of capital will be higher in savings banks than commercial banks. On the other hand, a commercial bank is problematic for the customer because its owners have post-contract incentives to increase the risk at their customers' expense.…”

Section: Theorymentioning

confidence: 99%

Are Owners Redundant?

Bøhren,

Josefsen

2007

SSRN Journal

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This paper explores how firms with different stakeholder structures choose their assets and liabilities and how they perform as economic entities. Our data from the Norwegian banking industry shows that ownerless firms are smaller, charge higher prices, and take on less risk than stockholder-owned firms, whereas partially stockholder-owned firms fall in between. Such behaviour is as expected when stakeholders use their control rights to make the firm behave in ways they prefer. More surprisingly, ownerless firms are not outperformed by firms fully or partially controlled by stockholders. This finding questions the critical role of owners posited by agency theory, but supports the idea that the disciplining effect of product market competition is a powerful substitute for ownership. The evidence also suggests that stockholders may benefit economically from internalizing welfare effects of their actions on other stakeholders, such as employees, customers, and the local community.

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Section: Theorymentioning

confidence: 99%

Are Owners Redundant?

Bøhren,

Josefsen

2007

SSRN Journal

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“…• Sorting out different preferences toward risk. In this case, the coexistence of mutual and stock insurance firms serves as a sorting mechanism to sort out heterogeneous customers; customers with high risk aversion will choose mutual insurance and customers with low risk aversion will choose stock insurance, as shown by Remmers (2003).…”

Section: Introductionmentioning

confidence: 99%

Threshold control of mutual insurance with limited commitment

Jia

Liu

2008

Insurance: Mathematics and Economics

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Organizational Form Coexistence: Stock and Mutual Financial Firms

Cited by 2 publications

References 50 publications

Are Owners Redundant?

Are Owners Redundant?

Threshold control of mutual insurance with limited commitment

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