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Nonprofit boards: Size, performance and managerial incentives

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  • Aggarwal, Rajesh K.
  • Evans, Mark E.
  • Nanda, Dhananjay

Abstract

We examine relations between board size, managerial incentives and enterprise performance in nonprofit organizations. We posit that a nonprofit's demand for directors increases in the number of programs it pursues, resulting in a positive association between program diversity and board size. Consequently, we predict that board size is inversely related to managerial pay-performance incentives and positively with overall organization performance. We find empirical evidence consistent with our hypotheses. The number of programs is positively related to board size. Board size is associated negatively with managerial incentives, positively with program spending and fundraising performance, and negatively with commercial revenue, in levels and changes.

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  • Aggarwal, Rajesh K. & Evans, Mark E. & Nanda, Dhananjay, 2012. "Nonprofit boards: Size, performance and managerial incentives," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 466-487.
    • Handle: RePEc:eee:jaecon:v:53:y:2012:i:1:p:466-487
    DOI: 10.1016/j.jacceco.2011.08.001
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    9. Andrew R. Finley & Curtis Hall & Erica Harris & Stephen J. Lusch, 2021. "The Effect of Large Corporate Donors on Non-profit Performance," Journal of Business Ethics, Springer, vol. 172(3), pages 463-485, September.
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    12. Hofmann, Mary Ann & McSwain, Dwayne, 2013. "Financial disclosure management in the nonprofit sector: A framework for past and future research," Journal of Accounting Literature, Elsevier, vol. 32(1), pages 61-87.
    13. Arnaud Lacan, 2022. "Value-Based Governance as a Performance Element in Social and Solidarity Economy Organizations: A French Sustainable Post-Modern Proposal," Sustainability, MDPI, vol. 14(4), pages 1-11, February.
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    15. Saitgalina Marina & Dicke Lisa A. & Birungi Patricia, 2020. "Organizational Determinants of Political Involvement in Trade and Professional Membership Associations," Nonprofit Policy Forum, De Gruyter, vol. 11(1), pages 1-15, January.
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