Research on Incentives in the Compensation Contracts of Non-profit Hospital CEOs
In this paper,we use the multi-task principal agent model of Holmstrom and Milgrom The Journal of Law,Economics and Organization 7 (1991) (Suppl.) 24 to argue that nonprofit hospitals represent an optimal response to information asymmetries between managers and board (government).For a board (government) with multidimensional objectives,the agency problem is getting top executives to distribute their efforts across all dimensions of the hospitals mission.The nonprofit form is preferred because the absence of high powered incentives such as share ownership reduces executives incentives to place undue emphasis on improving financial performance at the expense of important but less observable tasks.Using newly available compensation data we test the model by comparing the conditional distributions of earnings for industrial and nonprofit hospital CEOs in China.Our best estimates are that CEOs in publicly traded firms earn twice as much on average as those in similarly sized nonprofit hospitals but bear roughly eight times the income variance.Estimates of the associated degree of risk aversion are well within conventional bounds and are consistent with the trade-off between insurance and incentives predicted by the theory.
Executive compensation Nonprofit Hospitals Principal agent model
LI Zhongchi
School of Economics and Management,Wuhan University,P.R.China 630072
国际会议
2007 International Conference on Management Science and Engineering(2007管理科学与工程国际学术会议)
河南焦作
英文
2067-2072
2007-08-20（万方平台首次上网日期，不代表论文的发表时间）