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Stakeholder Orientation and Capital Structure in the Social Care Sector

Author

Listed:
  • Alessandro Fedele

    (Free University of Bolzano‐Bozen, Faculty of Economics and Management)

  • Raffaele Miniaci

    (University of Brescia, Department of Economics and Management)

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.

Suggested Citation

  • Alessandro Fedele & Raffaele Miniaci, 2017. "Stakeholder Orientation and Capital Structure in the Social Care Sector," BEMPS - Bozen Economics & Management Paper Series BEMPS40, Faculty of Economics and Management at the Free University of Bozen.
    • Handle: RePEc:bzn:wpaper:bemps40
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    File URL: https://repec.unibz.it/bemps40.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    capital structure; for-profit firms; non-profit enterprises; stakeholder orientation; nondistribution constraint; social care sector;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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