The Effects of Local Newspaper Closures on Nonprofits’ Executive Compensation

49 Pages Posted: 26 Aug 2022 Last revised: 27 Nov 2023

See all articles by Robert Felix

Robert Felix

Catholic University of America (CUA) - Busch School of Business and Economics

Joshua Khavis

University at Buffalo (SUNY) - School of Management

Mikhail Pevzner

University of Baltimore - Merrick School of Business

Date Written: November 20, 2023

Abstract

We examine the role of local newspapers in monitoring the nonprofit sector by testing how local newspaper closures affect nonprofits’ executive compensation levels. Although prior research establishes that local newspaper closures affect behavior of for-profits and municipalities, the unique governance and enforcement environment of nonprofits make it unclear whether and how closures of local newspapers will affect nonprofits’ executive compensation spending behavior. Consistent with local newspapers serving as an alternative monitoring mechanism within the nonprofit sector, we find that, following local newspaper closures, the levels of nonprofits’ executive compensation spending increases. This effect is less pronounced among nonprofits having audits and among those with better internal governance. Our results suggest that newspaper closures exacerbate agency problems among nonprofits particularly when alternative monitoring mechanisms of nonprofits are weaker.

Suggested Citation

Felix, Robert and Khavis, Joshua and Pevzner, Mikhail, The Effects of Local Newspaper Closures on Nonprofits’ Executive Compensation (November 20, 2023). Journal of Accounting and Public Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4194822 or http://dx.doi.org/10.2139/ssrn.4194822

Robert Felix

Catholic University of America (CUA) - Busch School of Business and Economics ( email )

620 Michigan Avenue, NE
Washington, DC 20064
United States

Joshua Khavis

University at Buffalo (SUNY) - School of Management ( email )

346 Jacobs Management Center
Buffalo, NY NY 14260
United States
7166453274 (Phone)

Mikhail Pevzner (Contact Author)

University of Baltimore - Merrick School of Business ( email )

1420 N. Charles St.
Baltimore, MD 21201-5779
United States

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