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Insolvency, moral hazard and expense preference behavior: Evidence from US savings and loan associations
Author(s) -
Gropper Daniel M.,
Beard T. Randolph
Publication year - 1995
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090160604
Subject(s) - insolvency , loan , moral hazard , stock (firearms) , preference , business , actuarial science , economics , incentive , finance , microeconomics , mechanical engineering , engineering
This article applies the expense preference methodology to a study of determinants of employee compensation and occupancy costs for large samples of mutual and stock savings and loan associations. Strong evidence that insolvency is associated with significant increases in these costs is obtained. Further, we find that the effect of insolvency on managerial expense preference behavior is more pronounced for mutual than stock associations.