The Restructuring of the Saskatchewan Wheat Pool: Overconfidence and Agency

This paper examines how agency problems combined with overconfidence and hubris by coop management lead to financial failure in the Saskatchewan Wheat Pool. As a consequence of both of these problems, the Pool made poor investment decisions and ended up in severe financial difficulties. These problems were exacerbated by three additional factors: (1) ownership and control were separated via an A-B share structure, leading to a situation where neither farmer members nor investors had an incentive to monitor management activities; (2) the sheer volume of investment activity undertaken made it virtually impossible for the board to stay on top of what was happening; and (3) as a result of the change financial structure, senior management had available a large amount of debt capital that it could spend.

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Journal Article
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Journal of Cooperatives, Volume 23
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 Record created 2017-04-01, last modified 2018-01-22

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