Accounting Papers

Document Type

Journal Article

Date of this Version

9-2006

Publication Source

Journal of Accounting and Economics

Volume

41

Issue

3

Start Page

307

Last Page

333

DOI

10.1016/j.jacceco.2006.02.001

Abstract

We examine three alternative explanations for excess endowments in not-for-profit firms: (1) growth opportunities, (2) monitoring, or (3) agency problems. Inconsistent with growth opportunities, we find that most excess endowments are persistent over time, and that firms with persistent excess endowments do not exhibit higher growth in program expenses or investments. Inconsistent with better monitoring, program expenditures toward the charitable good are lower for firms with excess endowments, and CEO pay and total officer and director pay are greater for firms with excess endowments. Overall, we find that excess endowments are associated with greater agency problems.

Copyright/Permission Statement

© 2006. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/

Keywords

corporate governance, not-for-profit, cash holdings, endowment, agency problems

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Date Posted: 27 November 2017

This document has been peer reviewed.