Constitutional Design and Investment in Cooperatives and Investor-Owned Enterprises

Alberto Bacchiega () and Gianni De Fraja ()

Discussion Papers from Department of Economics, University of York

Abstract: This paper studies the role of the corporate governance systems in cooperatives and in investor-owned enterprises. The difference between the two forms is reduced to the type of majority needed to take decisions: one head one vote for cooperatives and proportional to capital invested in investor-owned firms. We show that the institutional form chosen matters for the initial investment decision of the agents: in particular we find that members of a cooperative invest less than they would in an investor-owned enterprise. This finding tallies with empirical evidence suggesting that cooperatives are undercapitalised.

New Economics Papers: this item is included in nep-cdm, nep-mic, nep-pbe and nep-pol
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Related works:
Journal Article: Constitutional Design and Investment in Cooperatives and Investor-Owned Enterprises (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:yor:yorken:99/5

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