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Incentives in Nonprofit Organizations: Evidence from Hospitals

52 Pages Posted: 14 Feb 2000  

James A. Brickley

University of Rochester - Simon Business School

R. Lawrence Van Horn

Vanderbilt University - Strategy and Business Economics

Date Written: February 7, 2000

Abstract

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.

JEL Classification: G3, I1, L2, L3

Suggested Citation

Brickley, James A. and Van Horn, R. Lawrence, Incentives in Nonprofit Organizations: Evidence from Hospitals (February 7, 2000). Simon School of Business Working Paper No. FR 00-02. Available at SSRN: https://ssrn.com/abstract=209178 or http://dx.doi.org/10.2139/ssrn.209178

James Brickley

University of Rochester - Simon Business School ( email )

Carol Simon Hall 3-160L
Rochester, NY 14627
United States
585-275-3433 (Phone)
585-442-6323 (Fax)

R. Van Horn (Contact Author)

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States

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