The Restructuring of the Saskatchewan Wheat Pool: Overconfidence and Agency

Murray E. Fulton and Kathy A. Larson

Journal of Cooperatives, 2009, vol. 23, 20

Abstract: This paper examines how agency problems combined with overconfidence and hubris by coop management lead to financial failure in the Saskatchewan Wheat Pool. As a consequence of both of these problems, the Pool made poor investment decisions and ended up in severe financial difficulties. These problems were exacerbated by three additional factors: (1) ownership and control were separated via an A-B share structure, leading to a situation where neither farmer members nor investors had an incentive to monitor management activities; (2) the sheer volume of investment activity undertaken made it virtually impossible for the board to stay on top of what was happening; and (3) as a result of the change financial structure, senior management had available a large amount of debt capital that it could spend.

Keywords: Agribusiness; Crop Production/Industries (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:jlcoop:56886

DOI: 10.22004/ag.econ.56886

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