How Do Board Size and Occupational Background of Directors Influence Social Performance in For-profit and Non-profit Organizations? Evidence from California Hospitals
This study investigates how board size and occupational background of directors differentially influence social performance in for-profit and non-profit organizations. Using data from California hospitals, we develop a quantitative measure of social performance and provide the following empirical evidence. First, board size is negatively (positively) associated with social performance in for-profit (non-profit) hospitals. Second, the presence of government officials on the board is negatively (positively) related to social performance in for-profit (non-profit) hospitals. Third, representation of physicians on the board is positively associated with social performance in for-profit hospitals, whereas their presence is not significantly related to social performance in non-profit hospitals. Our findings highlight the different effects of governance mechanisms on social performance in for-profit and non-profit organizations.
KeywordsBoard size Governance Occupational background Ownership Social performance
- Aggarwal, R. K., Evans, M. E., & Nanda, D. (2011). Nonprofit boards: Size, performance and managerial incentives. Journal of Economic Literature, 48(1), 58–107.Google Scholar
- Alexander, J., Morlock, L., & Gifford, B. (1988). The effects of corporate restructuring on hospital policymaking. Health Services Research, 23(2), 311–337.Google Scholar
- Beasley, M. (1986). An empirical analysis of the relation between the board of director composition and financial statement fraud. The Accounting Review, 71(4), 443–465.Google Scholar
- Bowen, W. (1994). Inside the boardroom: Governance by directors and trustees?. New York: Wiley.Google Scholar
- Buczko, W. (1994). Factors affecting charity care and bad debt charges in Washington hospitals. Hospital and Health Services Administration, 39, 179–191.Google Scholar
- Coyle, S. (2003). Providing care to undocumented immigrants. Retrieved from http://www.acponline.org/running_practice/ethics/case_studies/care_imm.pdf.
- Franklin, D. (2008). Just good business: A special report on corporate social responsibility. The Economist, 386, 3–6.Google Scholar
- Hermalin, B., & Weisbach, M. (2003). Boards of directors as an endogenously determined institution: A survey of the economic literature. Federal Reserve Bank of New York Economic Policy Review, 9, 7–26.Google Scholar
- Kaiser Family Foundation. (2011). The uninsured: Key facts about Americans without health insurance. Retrieved from http://www.kff.org/uninsured/upload/7451-07.pdf.
- Margolin, F., Hawkins, S., Alexander, J., & Prybil, L. (2006). Hospital governance: Summary report of 2005 survey of CEOS and Board Chairs. Chicago: Health Research and Educational Trust.Google Scholar
- Oster, S. (1995). The strategic management of non-profit organizations. New York: Oxford Press.Google Scholar
- Owens, B. (2005). The plight of the not-for-profit. Journal of Healthcare Management, 50(4), 237–250.Google Scholar
- Porter, M. E., & Kramer, M. R. (2006). The link between competitive advantage and corporate social responsibility. Harvard Business Review, 84(12), 78–92.Google Scholar
- Robinson, J., & Luft, H. (1985). The impact of hospital market structure on patient volume, average length of stay, and the cost of care. Journal of Economics, 4(4), 333–356.Google Scholar
- Rose-Ackerman, S. (1996). Altruism, non-profits, and economic theory. Journal of Economic Literature, 34, 701–728.Google Scholar
- The American Hospital Association (AHA). (2009). Uncompensated hospital care cost fact sheet. Retrieved from http://www.aha.org/aha/content/2009/pdf/09uncompensatedcare.pdf.
- The American Hospital Association (AHA). (2011). Fast facts on U.S. hospitals. Retrieved from http://www.aha.org/research/rc/stat-studies/fast-facts.shtml.
- The World Bank. (2011). Data by country. Retrieved from http://data.worldbank.org/country.
- Weisbrod, B. (1988). The nonprofit economy. Cambridge, MA: Harvard University Press.Google Scholar
- Wooldridge, J. (2002). Econometric analysis of cross section and panel data. Cambridge, MA: MIT Press.Google Scholar