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The Ownership Complaint Gap: Mutual versus Stock Intermediaries

Author

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  • Cheng, Jiang
  • Qian, Wenlan
  • Reeb, David M.

Abstract

We document a substantial customer complaint gap between stock and mutual financial firms. To assess whether this 21% per year complaint gap stems from complaint-prone customers in stock insurers, we examine state-adjudicated complaint success. To further delineate between customer selection or treatment explanations, we exploit within insurer complaints around random claims (natural disasters) and attention shocks (media scrutiny). Further tests reveal the complaint gap widens with greater competition, near insolvency thresholds, and with more price regulation. Overall, the results are inconsistent with the hypothesis that mutual financial firms exhibit low customer satisfaction, suggesting customers find this a beneficial organizational structure.

Suggested Citation

  • Cheng, Jiang & Qian, Wenlan & Reeb, David M., 2020. "The Ownership Complaint Gap: Mutual versus Stock Intermediaries," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 55(5), pages 1685-1715, August.
    • Handle: RePEc:cup:jfinqa:v:55:y:2020:i:5:p:1685-1715_9
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    Cited by:

    1. Jiang Cheng & Travis Chow & Tzu‐Ting Lin & Jeffrey Ng, 2022. "The effect of accounting for income tax uncertainty on tax‐deductible loss accruals for private insurers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(2), pages 505-544, June.
    2. G. Tomas M. Hult & Forrest V. Morgeson III & Udit Sharma & Claes Fornell, 2022. "Customer satisfaction and international business: A multidisciplinary review and avenues for research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 53(8), pages 1695-1733, October.

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