Ownership structure and performance in UK life offices

Nadege Genetay

European Management Journal, 1999, vol. 17, issue 1, 107-115

Abstract: The literature on ownership and control suggests that the absence of mechanisms of corporate control may lead to managerial discretion. Hence, managers of mutuals may display lack of diligence in the management of their corporations, which may be reflected in lower returns, risk aversion and greater expense ratios. In this paper, we conduct a test of the managerial discretion hypothesis. The study covers the period 1988-1992 and examines a sample of 41 UK life offices, including 14 mutuals. We found that mutuals were characterised by significantly lower average returns on total assets and significantly lower volatility of those returns. However, we found that expense ratios for mutual offices were not significantly different from those of their proprietary counterparts over the period of study.

Date: 1999
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