- Constraining Managers without Owners: Governance of the Not-for-Profit Enterprise
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- by Desai, Mihir A.; Yetman, Robert J.
- In the absence of owners, how effective are the constraints imposed by the state in
promoting effective firm governance? This paper develops state-level indices of governance
environment facing not-for-profits and examines the effects of these rules on not-for-profit
behavior. Stronger provisions aimed at detecting managerial misbehavior are associated with
significantly greater charitable expenditures, increased foundation payouts and lower insider
compensation. Instrumental variables analysis confirms the relationship between the governance
environment and not-for-profit performance. The paper also examines how governance
influences an alternative metric of not-for-profit performance—the provision of social insurance.
Stronger governance measures are associated with intertemporal smoothing of resources and
greater activity in response to negative economic shocks.
- Publication Type: WCFIA Working Paper
- Published Date: July 2006
- Field of Interest: Political Economy
- Desai, Mihir, and R. Yetman. "Constraining Managers without Owners: Governance of the Not-for-Profit Enterprise." Working Paper 2008-0021, Weatherhead Center for International Affairs, Harvard University, July 2006.
- Also NBER Working Paper No. 11140.