Penalva, José S.Van Bommel, Jos2022-05-092022-05-092016-12-13Penalva, J., & van Bommel, J. (2017). The Governance of Perpetual Financial Intermediaries. Journal of Institutional and Theoretical Economics, 173 (3), pp. 498-522.https://hdl.handle.net/10016/34749In this paper we re-examine the risk sharing potential of inter- generational financial intermediaries taking into account their governance structure. We argue that asset buffers of perpetual institutions are limited by the temptation of the living stakeholders to renegotiate contributions and distributions. We characterize the renegotiation constraint and show that it severely limits intergenerational risk sharing. Without renegotiation frictions, intermediaries cannot provide higher welfare than a market. The existence of (self-imposed) renegotiation costs relaxes the constraint. By forming a single monopolist intermediary, agents can further improve welfare.eng© Mohr Siebeckresearch articleG21D91https://doi.org/10.2139/ssrn.2372438open access4983522Journal of Institutional and Theoretical Economics173AR/0000018924