The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 09 Jul 2026 19:49:57 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Nonprofit Boards: Size, Performance and Managerial Incentives – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Nonprofit Boards: Size, Performance and Managerial Incentives https://corpgov.law.harvard.edu/2011/10/10/nonprofit-boards-size-performance-and-managerial-incentives/?utm_source=rss&utm_medium=rss&utm_campaign=nonprofit-boards-size-performance-and-managerial-incentives https://corpgov.law.harvard.edu/2011/10/10/nonprofit-boards-size-performance-and-managerial-incentives/#comments Mon, 10 Oct 2011 12:24:03 +0000 http://blogs.law.harvard.edu/corpgov/?p=22200?d=20150105142306EST Posted by R. Christopher Small, Co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Monday, October 10, 2011
Editor's Note:

The following post comes to us from Rajesh Aggarwal of the Department of Finance at the University of Minnesota; Mark Evans of the Department of Accounting at Indiana University; and Dhananjay Nanda, Professor of Accounting at the University of Miami.

In the paper, Nonprofit Boards: Size, Performance and Managerial Incentives, forthcoming in the Journal of Accounting and Economics as published by Elsevier, we study the relation between a nonprofit organization’s board of directors and the number of programs or objectives it pursues, its performance and its manager’s incentives. We posit that board membership is only conferred on directors that bring assets that are valuable to the nonprofit. However, the conferred control rights allow the directors to use the organization to pursue their own objectives. We hypothesize that directorship is only granted when the value of a director’s asset exceeds the cost of accommodating their objective. Consequently, we predict that board size is positively related to the number of objectives a nonprofit pursues, its performance in raising and spending funds, and inversely related to its managers’ incentives.

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