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Internal governance and performance: Evidence from when external discipline is weak

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  • Kalodimos, Jonathan

Abstract

The effect of internal governance on performance is potentially economically significant but may be difficult to identify because of confounding external disciplinary mechanisms and the endogenous choice of internal governance. This study addresses those difficulties by using nonprofit hospitals as an economic environment with muted external disciplinary mechanisms and instrumenting for internal governance using governance spillovers of geographically local public firms. Using patient heart attack survival as a measure of performance, a one standard deviation increase in strength of internal governance reduces the probability of death by 0.89 percentage points after controlling for patient characteristics.

Suggested Citation

  • Kalodimos, Jonathan, 2017. "Internal governance and performance: Evidence from when external discipline is weak," Journal of Corporate Finance, Elsevier, vol. 43(C), pages 193-216.
    • Handle: RePEc:eee:corfin:v:43:y:2017:i:c:p:193-216
    DOI: 10.1016/j.jcorpfin.2017.01.005
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    Cited by:

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    3. Yan He & Frank Long, 2020. "DCF Valuation of Nonprofit Universities," Applied Finance and Accounting, Redfame publishing, vol. 6(1), pages 1-8, February.
    4. Chien, Yi-Hsin & Hung, Mao-Wei, 2020. "The impact of appointment-based CEO connectedness on firms’ performance and profitability," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).

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    More about this item

    Keywords

    Corporate governance; Nonprofit organizations; Hospitals;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • I10 - Health, Education, and Welfare - - Health - - - General

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