This paper discusses the impact of certain organizational characteristics on financial decisions of cooperatives. A theoretical analysis is presented, including the discussion of some important variables to study capital structure and investment decisions in cooperatives, such as the nature of equity, cost of capital, organizational incentives, and specificity of assets. The main challenge is the design and implementing an organizational structure to attract equity capital, thereby reducing constraints to debt financing. Furthermore, the design of a proper incentive structure is needed to avoid the selection of projects with negative net present value - a typical problem in cooperatives due to the underestimation of the marginal cost of equity capital. This is a conceptual study suggesting some relevant topics for further theoretical and empirical research.
cooperatives; property rights; finance; capital structure; investment decision