Abstracts » Economics

The information content of litigation participation securities: the case of CalFed Bancorp

Article Abstract:

CalFed Bancorp and other savings and loan associations had been encouraged by regulators to acquire failing thrifts in the 1980s as the acquisition could create assets known as supervisory goodwill in their balance sheets. When the Financial Institutions Reform Recovery, and Enforcement Act of 1989 was passed crippling their business with restrictions, they sued the government for damages and won and if victorious on appeal, holders of their participation securities will get a fraction of the damages, which makes the company attractive for a takeover.

United States, Statistical Data Included, Banking industry, Cases, Securities, CalFed Inc., CAL

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Organizational form and risk taking in the savings and loan industry

Article Abstract:

Research was conducted on the relationship of organizational form with residual claims and risk taking. Results show that mutual thrifts were more conservative in taking risks. The conservatism is brought about by an organization's inability to sell thrift claims, due to the restrictions imposed on share transferability that decrease the incentive to maximize equity value.

Portfolio management, Investment analysis, Securities analysis

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A case study of organizational form and risk shifting in the savings and loan industry

Article Abstract:

Organizational structure has been found to have a significant implication on a firm's risk-taking strategies to effect profits for shareholders. A stock thrift organization has been aggressive in its risk-taking strategy due to high inside ownership that enables day-to-day investment decisions. The stock thrift structure also creates conditions that lower transactions costs and enable easy reconfiguration of balance sheet.

Bank investments, Twin City Savings and Loan Association, Minden Building and Loan Association

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