Are owners redundant? Øyvind Bøhren Morten G. Josefsen BI-Norwegian School of Management Nydalsveien 37, N-0442 Oslo, Norway* Abstract This paper explores how firms with different stakeholder structures choose their assets and liabilities and how they perform as economic entities. Our data from the Norwegian banking industry shows that ownerless firms are smaller, charge higher prices, and take on less risk than stockholder-owned firms, whereas partially stockholder-owned firms fall in between. Such behaviour is as expected when stakeholders use their control rights to make the firm behave in ways they prefer. More surprisingly, ownerless firms are not outperformed by firms fully or partially controlled by stockholders. This finding questions the critical role of owners posited by agency theory, but supports the idea that the disciplining effect of product market competition is a powerful substitute for ownership. The evidence also suggests that stockholders may benefit economically from internalizing welfare effects of their actions on other stakeholders, such as employees, customers, and the local community. March 06 2007 Keywords: Corporate governance mechanisms, organizational form, competition, banks JEL classification codes: G21, G34 *We acknowledge valuable discussions with Rafel Crespí-Cladera, Miguel Garcia-Cestona, Michel Habib, Arne Hyttnes, Sverre Knutsen, Einar Lyford, Hans Thrane Nilsen, L. Bogdan Stacescu, Trond Tostrup, as well as feedback from seminar participants at BI, Universitat Autonoma de Barcelona, and the University of Oslo. This research was partly conducted while Josefsen was visiting HEC Paris. We have received financial support from the Banking Research Fund at BI.