More than just loyalty? Understanding members’ investment in their cooperatives’ tradable preferred shares

Guided by behavioural economics, this paper examines the factors shaping members’ investments in tradable and appreciable preferred shares issued by their cooperatives. These shares possess characteristics of both bonds and long-term equity, and when tradable, they acquire a market value that helps mitigate issues related to the vaguely defined property rights of cooperatives. Using survey data from 1124 members of Sweden's two largest agricultural cooperatives, we analyse how investment decisions are related to trust in the cooperative, membership duration and knowledge of preferred shares, which we interpret within a behavioural framework related to risk perception. A two-step regression approach, binary logit for participation and generalized ordered logistic regression for investment levels, reveals that higher trust, longer membership and greater knowledge are associated with a higher likelihood of investing. Conditional on participation, membership duration and knowledge remain positively associated with higher investment levels, whereas trust does not. These findings provide insights for cooperatives seeking to mobilize capital while maintaining member control. They highlight the behavioural mechanisms underlying investment decisions in cooperative finance.