Nonprofit boards: Size, performance and managerial incentives

Corporate philanthropy in the US stock market: Evidence on corporate governance, value relevance and earnings manipulation

“…The actual contribution should be higher than the cost incurred to the donor when contributions are tax-deductible. Aggarwal et al (2012) argue that companies set managerial goals, including community welfare and development, environmental protection and non-profit causes, which promote shareholder value maximization from a broader perspective. Thus, large and highly visible companies, such as telecommunications and media, may be inclined to give back to the community in the form of public donations in order to obtain a favorable treatment from market participants and authorities (Wood and Jones, 1995;Galaskiewicz, 1997;Buchholtz et al, 1999;Amato and Amato, 2007).…”

“…Larger boards would get involved with more non-financial objectives that go beyond the narrowly defined financial performance maximization targets (Aggarwal et al, 2012).…”

Executive compensation in health care

“…Outside U.S. hospitals, Sigler's (2003) analysis of executive compensation determinants at health care organizations on Forbes' Highest-Paid CEOs lists identified company financial performance as a statistically significant predictor of CEO cash compensation. The examination of Aggarwal, Evans, and Nanda (2012) of nonprofit health care organizations identified a statistically significant and positive relationship between CEO compensation and total revenue coefficients of variation as well as between the percentage change in CEO compensation and both the percentage change in revenue and the change in yield, and Stahl's (2000) study of CEO pay and performance at HMOs found a weak association between executive compensation and profitability. Among studies in Canadian hospitals, the connection between pay and performance appears to be mixed: Pink and Leatt (1991) found a positive but weak link between financial performance and CEO pay, Preyra and Pink (2001) identified financial performance as a statistically significant determinant of CEO pay that was markedly weaker among hospitals compared with other industries, and Reiter et al (2009) found hospital CEO pay to be largely unrelated to financial performance.…”

“…In the Netherlands, Cardinaels (2009) identified financial performance as positively related to CEO compensation at Dutch hospitals, although in only one of the study's models was financial performance observed as a determinant at the 5% level of significance. An important observation across each of these studies is the varied measures employed for organizational financial performance, including measures relating to profit or operating margins (Bertrand et al, 2005;Eldenburg & Krishnan, 2003;Kramer & Santerre, 2010;Moskowitz, 1999), net or residual income (Pink & Leatt, 1991;Preyra & Pink, 2001;Stahl, 2000), revenue growth (Aggarwal et al, 2012;Cardinaels, 2009), return on assets or equity (Bertrand et al, 2005;Brickley & Van Horn, 2002;Brickley, Van Horn, & Wedig, 2010;Sigler, 2003), occupancy rate (Kramer & Santerre, 2010;Oster, 1998), change in yield (Aggarwal et al, 2012), and categorical measures of financial performance (Ballou & Weisbrod, 2003;Moskowitz, 1999;Reiter et al, 2009). Organizational size.…”

Regulator Leniency and Mispricing in Beneficent Nonprofits

“…Furthermore, we include the natural logarithm of the number of board members (Log Boardsize) to control for monitoring effectiveness. A larger board might lead to a lower monitoring effectiveness because of dysfunctional behavior, such as free-rider problems (Aggarwal, Evans, and Nanda, 2011;Yermack, 1996), and thus enable more upcoding. We further address the possibility that a hospital is church-owned (Church Dummy) and include additional controls for hospital membership in a multi-hospital system (System Dummy) and location in a rural area (Rural Dummy).…”