ORGANIZATIONAL FORM AND RISK-TAKING IN THE SAVINGS-AND-LOAN INDUSTRY

I hypothesize that risk taking is greater in stock thrifts than in mut ual thrifts because the residual and fixed claims are separable. I fin d that stock thrifts exhibit greater profit variability during the 198 2-88 period and that conversions from mutual to stock ownership are as sociated with increased investment in risky assets and increased profi t variability. These findings illustrate the relation between the stru cture of residual claims, incentives, and firm performance as well as the unintended consequences resulting from changes in thrift regulatio ns.