Control Without Ownership: Governance of Nonprofit Hospitals

Katharina Lewellen, Gordon Phillips and Giorgo Sertsios

No 34132, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze the governance of nonprofit hospitals, focusing on the external mechanism through the market for corporate control. Relative to for-profits, nonprofit boards are larger, have more employee directors, less industry expertise, and weaker incentives; CEO pay and turnover are less responsive to performance. Nonprofit takeovers are followed by insiders’ departures. However, nonprofits with poor financial performance are half as likely as for-profits to be acquired, and nonfinancial performance is unrelated to acquisitions. Oversight strength explains a substantial share of the takeover gap. While nonprofits may deliver stakeholder benefits, our evidence points to limits to governance as an associated cost.

JEL-codes: G3 G30 G31 G34 G38 (search for similar items in EconPapers)
Date: 2025-08
New Economics Papers: this item is included in nep-cfn, nep-eur and nep-hrm
Note: CF IO
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