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
I appreciate helpful comments and suggestions from Henry Friedman, John Goddeeris, Ranjani Krishnan, Vanessa Magness, Dara Marshall, Kathy Petroni, K. Ramesh, Karen Sedatole, Mike Shields, workshop participants at Michigan State University, and participants at the 2011 Canadian Academic Accounting Association Annual Conference and the 2011 American Accounting Association Annual Meeting.
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