Hospital Governance, Performance Objectives, and Organizational Form
University of Arizona
Benjamin E. Hermalin
University of California, Berkeley
Michael S. Weisbach
Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER)
Harvard Business School
Presented at Tuck-JFE Contemporary Corporate Governance Conference
This paper studies the governance of a sample of California hospitals. We document a number of empirical relations about hospital governance: The composition of the board of directors varies systematically across ownership types; poor performance and high administrative costs increase board turnover, with this sensitivity varying by organizational type; and poor performance, high administrative costs, and high uncompensated care lead to higher CEO turnover, with these effects again varying across different organizational types. Overall, these results are consistent with the view that boards of directors of hospitals of different organizational forms are substantially different, and that these boards make decisions to maximize different objective functions.
Number of Pages in PDF File: 35
Keywords: board structure, corporate governance
JEL Classification: G34, I12
Date posted: July 25, 2000
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