Working Paper: NBER ID: w11140
Authors: Mihir A. Desai; Robert J. Yetman
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.
Keywords: No keywords provided
JEL Codes: L30; G30; H40; K20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stronger nondistribution constraints (D39) | Greater charitable expenditures (D64) |
| Stronger nondistribution constraints (D39) | Lower insider compensation (J31) |
| Stronger reporting requirements (G28) | Lower insider compensation (J31) |
| Stronger governance measures (G38) | Intertemporal smoothing of resources (D15) |
| Stronger governance measures (G38) | Increased responsiveness to negative economic shocks (E44) |