Incentives in Nonprofit Organizations: Evidence from Hospitals
James A. Brickley
University of Rochester - Simon Business School
R. Lawrence Van Horn
Vanderbilt University - Strategy and Business Economics
February 7, 2000
Simon School of Business Working Paper No. FR 00-02
This paper examines the incentives of CEOs in a large sample of nonprofit hospitals. The evidence suggests that the relations between financial performance (return on assets) and CEO turnover and compensation are as strong in nonprofit hospitals as in for-profit hospitals and other for-profit corporations. We find little evidence that nonprofit hospitals provide explicit incentives for their CEOs to focus on altruistic activities. The results add to the collective evidence that there is little distinction between the behaviors of nonprofit and for-profit hospitals. We provide some evidence that these similarities are due to competition in the marketplace, not identical objective functions.
Number of Pages in PDF File: 52
JEL Classification: G3, I1, L2, L3
Date posted: February 14, 2000
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