Internal Governance and Performance: Evidence from When External Discipline Is Weak

51 Pages Posted: 18 Mar 2014 Last revised: 15 Jan 2017

See all articles by Jonathan Kalodimos

Jonathan Kalodimos

Oregon State University - College of Business

Date Written: April 12, 2016

Abstract

The effect of internal governance on performance is potentially economically significant but may be difficult to identify because of confounding external disciplinary mechanisms and the endogenous choice of internal governance. This study addresses those difficulties by using nonprofit hospitals as an economic environment with muted external disciplinary mechanisms and instrumenting for internal governance using governance spillovers of geographically local public firms. Using patient heart attack survival as a measure of performance, a one standard deviation increase in strength of internal governance reduces the probability of death by 0.89 percentage points after controlling for patient characteristics.

Keywords: Corporate Governance, Nonprofit Organizations, Hospitals

JEL Classification: G30, G34, L31, I10

Suggested Citation

Kalodimos, Jonathan, Internal Governance and Performance: Evidence from When External Discipline Is Weak (April 12, 2016). Journal of Corporate Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2410027 or http://dx.doi.org/10.2139/ssrn.2410027

Jonathan Kalodimos (Contact Author)

Oregon State University - College of Business ( email )

Corvallis, OR 97331
United States

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