Family Control and Expropriation of Not-for-Profit Organizations: Evidence from Korean Private Universities
- Family Control and Expropriation of Not-for-Profit Organizations: Evidence from Korean Private Universities
- Bae, Kee-Hong; Kim, Seung-Bo
- Nonprofit; Governance; Expropriation; Donation; Private University
- Issue Date
- Series/Report no.
- KDI Working Paper Series;06-01
- We examine the agency problems of Korean private universities. A distinct feature of many
Korean private universities is that they are under the control of founding families. There are
few mechanisms to monitor families' discretionary power, which creates incentives to
misbehave. We find that measures of family commitment (measures of family control) are
positively (negatively) related to the university performance and that poorly governed
universities are more likely to undergo a dispute between the controlling family and other
stakeholders. Finally, we show that our results are not driven by the reverse causality that
better performance leads to better university governance.
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