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Family control and expropriation at not-for-profit organizations: evidence from korean private universities

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  • Bae, Kee-Hong
  • Kim, Seung-Bo
  • Kim, Woochan

Abstract

We study an agency problem in private universities — the conflict between controlling families and other stakeholders. We investigate whether universities over which controlling families have disproportionately significant power relative to the amount of funds they contribute, that is, universities with high expropriation risk, are associated with lower outside donations and poor quality. Using a sample of Korean private universities, we find that measures of family control in excess of monetary contributions are negatively related to the level of outside donation and measures of university quality. We also find that universities at which the controlling family exerts disproportionate control are more likely to face disputes between the controlling family and other stakeholders. Finally, we show that our results are not driven by reverse causality.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 44029.

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Date of creation: 01 Mar 2012
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Publication status: Published in Corporate Governance: An International Review 20.4(2012): pp. 388-404
Handle: RePEc:pra:mprapa:44029

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Keywords: Corporate Governance; Non-profits; Expropriation; Donations; Private University;

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