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.
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Paper provided by Department of Economics, University of York in its series Discussion Papers with number
99/5.
Length: Date of creation: Date of revision: Handle: RePEc:yor:yorken:99/5
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