The Influence of Ownership and Compensation Practices on Charitable Activities
University of Arizona
Fabio B. Gaertner
University of Wisconsin - Madison - Department of Accounting and Information Systems
Theodore H. Goodman
Purdue University - Department of Accounting
September 30, 2013
Contemporary Accounting Research, Forthcoming
Recent accounting research provides evidence that similar profit-based compensation incentives are used in for-profit and nonprofit hospitals. Because charity care reduces profits, such incentives should lead for-profit hospital managers to reduce charity care levels. Nonprofit hospital managers, however, may respond differently to the same incentives because they face a different set of institutional pressures and constraints. We compare the association between pay-for-performance incentives and charity care in for-profit and nonprofit hospitals. We find a negative and significant association between charity care and our proxy for profit-based incentives in for-profit hospitals and no significant association in nonprofit hospitals. The evidence in the nonprofit sample that profit-based incentives have no significant effect on charity care levels suggests that institutional differences inherent in the nonprofit setting mitigate the negative effect of profit-based incentives on charity care.
Number of Pages in PDF File: 50
Keywords: Nonprofit hospitals, charity care, ownership structure, profit-based incentives
JEL Classification: I18, J33, L33, M40Accepted Paper Series
Date posted: December 18, 2009 ; Last revised: September 30, 2013
© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.453 seconds