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Thursday, March 21, 2013

Walker Presents Stakeholder Outrage Constrains University President Pay Today at North Carolina

WalkerDavid I. Walker (Boston University) presents Does Stakeholder Outrage Constrain Executive Compensation? Evidence from University President Pay (with Brian D. Galle (Boston College)) at North Carolina today as part of its Faculty Speaker Series:

We analyze the determinants of the compensation of private college and university presidents from 1999 through 2007. We find that the fraction of institutional revenue derived from current donations is negatively associated with compensation and that presidents of religiously-affiliated institutions receive lower levels of compensation. Looking at the determinants of contributions, we find a negative association between presidential pay and subsequent donations. We interpret these results as consistent with the hypotheses that donors to nonprofits are sensitive to executive pay and that stakeholder outrage plays a role in constraining that pay. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations.

http://taxprof.typepad.com/taxprof_blog/2013/03/walker-presents.html

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Comments

Simply showing that donors will give less to the college when they see increases in executive pay does not automatically mean that it constrains that pay. Keep in mind how shameless college presidents are, and the degree to which their interest comes before the school and especially the students.

Posted by: JM | Mar 21, 2013 4:49:07 PM

What if highly compensated presidents are just better at bringing in revenue from sources other than donations, such as grants, tuition, or merchandise?

Then success in other areas looks like failure in fundraising.

Posted by: Anon | Mar 27, 2013 2:28:01 PM