Constraining Managers Without Owners: Governance of the Not-for-Profit Enterprise

40 Pages Posted: 16 Mar 2005

See all articles by Mihir A. Desai

Mihir A. Desai

Harvard Business School - Finance Unit; National Bureau of Economic Research (NBER)

Robert J. Yetman

University of California, Davis - Graduate School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 2005

Abstract

In the absence of owners, how effective are the constraints imposed by the state in promoting effective firm governance? This paper develops state-level indices of the legal and reporting rules facing not-for-profits and examines the effects of these rules on not-for-profit behavior. Stronger non-distribution constraints are associated with greater charitable expenditures and foundation payouts while more stringent reporting requirements are associated with lower insider compensation. The paper also examines how governance influences an alternative metric of not-for-profit performance -- the provision of social insurance. Stronger governance measures are associated with intertemporal smoothing of resources and greater activity in response to negative economic shocks.

Suggested Citation

Desai, Mihir A. and Yetman, Robert, Constraining Managers Without Owners: Governance of the Not-for-Profit Enterprise (February 2005). NBER Working Paper No. w11140. Available at SSRN: https://ssrn.com/abstract=667183

Mihir A. Desai (Contact Author)

Harvard Business School - Finance Unit ( email )

Boston, MA 02163
United States
617-495-6693 (Phone)
617-496-6592 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robert Yetman

University of California, Davis - Graduate School of Management ( email )

One Shields Avenue
Davis, CA 95616
United States

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