Year: 2025
Type: article
Abstract: ABSTRACT Our paper examines the association between private foundation external monitoring costs and constructs related to internal monitoring, agency problems, organizational complexity, and investment opacity. We provide evidence that active donations are negatively associated with external monitoring costs. We interpret this as evidence that active donors provide more effective monitoring, and therefore pay lower external monitoring costs. We also find that board size is positively associated with external monitoring costs, consistent with larger boards being less effective internal monitors. Furthermore, we provide evidence that higher average board compensation results in lower external monitoring costs, which suggests that higher board compensation encourages more effective internal monitoring. We find a negative association between the grant ratio and external monitoring costs. Finally, we find positive associations between external monitoring costs and variables related to organizational complexity and investment opacity. Our research has implications for researchers and policymakers. Data Availability: All data are from publicly available sources cited in the text. JEL Classifications: L31; M40; M42; M48; M49.
Authors: Arthur C. Allen, Brian P. McAllister
Language: English
Subfield: Sociology and Political Science
Field: Social Sciences
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4409732201