Why Bad Things Happen to Good Organizations: The Link Between Governance and Asset Diversions in Public Charities

被引:46
作者
Harris, Erica [1 ]
Petrovits, Christine [2 ]
Yetman, Michelle H. [3 ]
机构
[1] Villanova Univ, Villanova, PA 19085 USA
[2] Coll William & Mary, Williamsburg, VA USA
[3] Univ Calif Davis, Davis, CA 95616 USA
关键词
Nonprofit; Fraud; Corporate governance; Asset diversion; Asset misappropriation; IRS Form 990; NONPROFIT ORGANIZATIONS; HOSPITALS; EMPLOYEES; FRAUD;
D O I
10.1007/s10551-015-2921-9
中图分类号
F [经济];
学科分类号
02 ;
摘要
In the United States, the IRS now requires charities to publicly disclose any significant asset diversion, which is the theft or unauthorized use of assets, that the charity identifies during the year. We use this new disclosure to investigate whether strong governance reduces the likelihood of a charitable asset diversion. Specifically, for a sample of 1528 charities from 2008 to 2012, we simultaneously examine eleven measures of governance that capture four broad governance constructs: board monitoring, independence of key individuals, tone at the top, and capital provider oversight. We find consistent evidence that good governance across all four constructs is negatively associated with the probability of an asset diversion. Of the eleven governance measures, our results indicate that monitoring by debt holders and government grantors, audits, and keeping managerial duties in-house are most strongly associated with lower incidence of fraud. Our results also indicate that the likelihood of a fraud is negatively associated with a board review of the Form 990, the existence of a conflict of interest policy, and the presence of restricted donations. In addition, we document that the likelihood of an asset diversion is negatively associated with program efficiency and positively associated with growth and organizational complexity.
引用
收藏
页码:149 / 166
页数:18
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