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Constitutional Design and Investment in Cooperatives and Investor‐Owned Enterprises
Author(s) -
Bacchiega Alberto,
De Fraja Gianni
Publication year - 2004
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/j.1467-8292.2004.00252.x
Subject(s) - corporate governance , business , investment (military) , capital (architecture) , institutional investor , investment decisions , finance , market economy , industrial organization , economics , politics , behavioral economics , archaeology , political science , law , history
This paper studies the role of the corporate governance system in cooperatives and in investor‐owned enterprises. We abstract from all possible differences between the two systems except the type of majority needed to take decisions: this is 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.