Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach

44 Pages Posted: 4 Dec 2013 Last revised: 26 Nov 2014

See all articles by Brian D. Galle

Brian D. Galle

Georgetown University Law Center

David I. Walker

Boston University School of Law

Date Written: December 17, 2013


We evaluate the effect of highly salient disclosure of private college and university president compensation on subsequent donations using a quasi-experimental research design. Using a differences-in-discontinuities approach to compare institutions that are highlighted in the Chronicle of Higher Education’s annual "top 10" list of most highly-compensated presidents against similar others, we find that appearing on a top 10 list is associated with reduced average donations of approximately 4.5 million dollars in the first full fiscal year following disclosure, despite greater fundraising efforts at "top 10" schools. We also find some evidence that top 10 appearances slow the growth of compensation, while increasing fundraising and enrollment, in subsequent years. We interpret these results as consistent with the hypothesis that donors care about compensation and react negatively to high levels of pay, on average; but (absent highly-salient disclosures) are not fully informed about pay levels. Thus, while donors represent a potential source of monitoring and discipline with respect to executive pay in the nonprofit sector, significant agency problems remain. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations.

Keywords: nonprofits, charity, executive compensation, agency costs, higher education, transparency, disclosure

JEL Classification: D64, D82, G39, I20, J33, L31

Suggested Citation

Galle, Brian D. and Walker, David I., Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach (December 17, 2013). Boston College Law School Legal Studies Research Paper No. 316, Boston Univ. School of Law, Public Law Research Paper No. 14-09, Available at SSRN: or

Brian D. Galle (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

David I. Walker

Boston University School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics