School of Business

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Browsing School of Business by Subject "Thrifts"

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    Demutualization: Determinants and consequences of the mutual holding company choice
    (Elsevier, 2009-01-21) Kenneth, Carow A.; Cox, Steven R.; Roden, Dianne M.
    We investigate the determinants and consequences of the mutual holding company (MHC) structure that allows mutual thrifts to issue stock to outside shareholders while maintaining the mutual form. Capital constrained firms with greater profit opportunities are more likely to choose a full demutualization; demonstrating that the MHC choice can be used to control for over- and under-investment costs. During periods of greater regulatory constraints, MHC firms have lower offer-day returns than full demutualizations. MHC firms are also less likely to be acquired as the MHC structure provides protection from the market for corporate control. Demonstrating a clear preference by minority shareholders for the elimination of the MHC structure, the announcement of a second-stage conversion generates a 12 percent return.
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    Mutual Holding Companies: Evidence of Conflicts of Interest through Disparate Dividends
    (Elsevier, 2003-04) Kenneth, Carow A.; Cox, Steven R.; Roden, Dianne M.
    The mutual holding company (MHC) structure establishes a dual-class stock that creates a unique opportunity to transfer wealth from thrift depositor-owners to new minority shareholders through the disparate payment of dividends. We show that MHCs are priced higher than comparable non-MHCs and dividend policy is a significant component of this valuation. We also show that MHC thrifts pay significantly higher dividends than non-MHC thrifts and that an Office of Thrift Supervision (OTS) ruling reducing the potential for disparate dividends between the two classes of shareholders resulted in lower dividends. These results have policy implications of special significance given that the OTS reversed its position in 2000 and because of the current controversy over the use of the MHC structure in the financial service industry.
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    The Role of Insider Influence in Mutual-to-Stock Conversions
    (Wiley-Blackwell Publishint, Ltd., 2007) Kenneth, Carow A.; Cox, Steven R.; Roden, Dianne M.
    Using a sample of 347 demutualizing thrifts from 1991 to 2004, we show that the level of inside participation is not a traditional signal of firm performance. We conclude that unanticipated inside participation reflects the incentives of insiders to reduce the size of the offer to influence the level of expected IPO returns. We find unanticipated inside participation is related to lower offer size and higher initial returns, but we do not find a relationship between inside participation and post-IPO performance.