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Stakeholder Orientation and Capital Structure in the Social Care Sector

Alessandro Fedele () and Raffaele Miniaci ()
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Raffaele Miniaci: University of Brescia, Department of Economics and Management

No BEMPS40, BEMPS - Bozen Economics & Management Paper Series from Faculty of Economics and Management at the Free University of Bozen

Abstract: Nonprofit enterprises differ from for-profit firms at least along two dimensions: the stakeholder-oriented governance system and the nondistribution-of-profit constraint. In turn, these two dimensions can affect the firms' choice of capital structure. On these grounds, the paper investigates the role played by stakeholder orientation and nondistribution constraint in shaping capital structure differences between for-profits and nonprofits. We show that the stakeholder orientation positively affects firms' leverage, while the nondistribution constraint has a negative impact. We empirically investigate which effect dominates by studying the Italian social care sector, where for-profit and profit enterprises coexist and have similar market shares. The estimates of a partial adjustment dynamic model show that, ceteris paribus, the leverage of mature nonprofit enterprises is 8% to 14% lower than that of mature for-profit companies.

Keywords: capital structure; for-profit firms; non-profit enterprises; stakeholder orientation; nondistribution constraint; social care sector (search for similar items in EconPapers)
JEL-codes: G32 D21 D22 L33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur and nep-hme
Date: 2017-05
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