The Ownership Structure of Investment Banks : A Case for Private Partnerships?

Given the recent collapse, merger or conversion to bank holding company status of the major publicly traded investment banks, it appears reasonable to question whether the public corporation is the most suitable form of organization for this industry. This paper integrates some of the existing theoretical and empirical literature on ownership structure, risk-taking and regulation as it relates to investment banks. A comparison of ownership structure characteristics suggests that, for this industry, the private partnership may be a more suitable form of organization, because its characteristics appear to be more compatible with, and supportive of, a sound financial system. A requirement to operate as private partnerships is a possible alternative to the government's supervision and regulation of investment banks