Nonprofit boards: Size, performance and managerial incentives

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

Research output: Contribution to journalArticle

32 Scopus citations

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.

Original languageEnglish (US)
Pages (from-to)466-487
Number of pages22
JournalJournal of Accounting and Economics
Volume53
Issue number1-2
DOIs
StatePublished - Feb 1 2012

Keywords

  • Boards of directors
  • Incentives
  • Nonprofits

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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