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Constitutional Design and Investment in Cooperatives and Investor-Owned Enterprises

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  • Alberto Bacchiega
  • Gianni De Fraja

Abstract

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.

Suggested Citation

  • Alberto Bacchiega & Gianni De Fraja, "undated". "Constitutional Design and Investment in Cooperatives and Investor-Owned Enterprises," Discussion Papers 99/5, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:99/5
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    References listed on IDEAS

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    Cited by:

    1. Ayalew Ali & Bayelign Abebe, 2024. "Does corporate governance and balance sheet feature influence the financial policy of cooperatives? PLS-SEM approach," PLOS ONE, Public Library of Science, vol. 19(5), pages 1-19, May.
    2. Stefano Zamagni, 2013. "Cooperative entrepreneurship," Chapters, in: Luigino Bruni & Stefano Zamagni (ed.), Handbook on the Economics of Reciprocity and Social Enterprise, chapter 9, pages 94-107, Edward Elgar Publishing.
    3. Stefano Zamagni & Vera Zamagni, 2010. "Cooperative Enterprise," Books, Edward Elgar Publishing, number 13842.
    4. Stefano Zamagni, 2005. "Per una teoria economico-civile dell'impresa cooperativa," AICCON Working Papers 10-2005, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.

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