We document a substantial customer complaint gap between stock and mutual financial firms. To assess whether this 21% per year complaint gap stems from complaint-prone customers in stock insurers, we examine state-adjudicated complaint success. To further delineate between customer selection or treatment explanations, we exploit within insurer complaints around random claims (natural disasters) and attention shocks (media scrutiny). Further tests reveal the complaint gap widens with greater competition, near insolvency thresholds, and with more price regulation. Overall, the results are inconsistent with the hypothesis that mutual financial firms exhibit low customer satisfaction, suggesting customers find this a beneficial organizational structure.
We benefited from discussions and comments by Sumit Agarwal, Gilles Hilary, Jennifer Huang, Amir Kermani, Ron Masulis, Randall Morck, Mitchell Petersen, Jeffrey Pontiff (the referee), Rodney Ramcharan, Amit Seru, Johan Sulaeman, Bernard Yeung, and seminar participants at the 2017 American Economic Association meetings, the 2016 Homer Hoyt meeting, the 2016 Asian Bureau of Finance and Economics meeting, Australian National University, Baruch College, Hong Kong Chinese University, CKGSB, Hong Kong Baptist, Hong Kong Lingnan, HKUST, National University of Singapore, New York University, Peking University, University of Hong Kong, University of New South Wales, and the University of Technology Sydney. Cheng gratefully acknowledges the support of the National Natural Science Foundation of China (Grant No. 71573164).