Search

This research analyzes the concept of financial vulnerability of nonprofits in depth. We review the definitions given by the prior literature, concluding that none of them is complete. We propose a definition in which financial vulnerability consists of three dimensions: operational (variation of net assets over time), leverage (relationship between total assets and debt), and liquidity (ratio of current assets to short-term debt). We use a sample of 212 Non-Governmental Development Organizations (NGDOs) from the United Kingdom to analyze these measures, observing a limited number of nonprofits simultaneously classified as vulnerable according to the different traditional concepts. Applying our proposed multidimensional model, we find that 6 % of the sample is highly financially vulnerable according to the three dimensions, and a high proportion (18 %) of nonprofits is simultaneously vulnerable in leverage and liquidity dimensions. Finally, we compare the obtained results using traditional variables and those derived from our model.

This article analyzes the financial vulnerability of 228 British nongovernmental development organizations (NGDOs) during the period 2008–2012. To do this, we use the Financial Vulnerability Index developed by Trussel et al. (2002). This index is commonly used in the literature on nonprofit organizations. However, we observe a very poor adaptation of the index to the reality of this industry, at least in predictive terms. The article goes deeply into each of the variables that are used to calculate this index, and we offer explanations of their inadequacy to this subsector of nonprofits.

Universidad Europea Miguel de Cervantes, C/Padre Julio Chevalier 2, 47012Valladolid, SpainCorresponding author email: meromero@uemc.esDue to the significant role of non-profit organizations in the development of modernsocieties, these organizations must adjust their boardrooms. Since traditional theoriesof corporate governance appear to be limited in explaining the changing non-profitworld, we propose an extended model of governance that integrates the traditionalarguments of agency theory with a cognitive dimension. Based on a sample of Spanishfoundations, we present evidence on the effect of the board composition on foundations’organizational efficiency. We show that board size and independence do not have adefinitive effect on the entity’s efficiency. Instead, the knowledge diversity inside theboardroom and the active character of trustees have a positive influence on resourceallocation. The cognitive dimension of the extended model of governance is critical toexplaining how boards impact on organizational performance.

To verify the existence and relevance of control mechanisms that impede the expropriation of resources by the managers of nonprofits and that improve efficiency, we use a representative sample of Spanish nongovernmental development organizations (NGDOs). The authors study how the donors’ structure and board of trustees relates to organizational efficiency. Results show that the presence of an active institutional donor provides a control mechanism for these NGDOs, thus favoring the efficient allocation of resources, and that the structure of the board of trustees is irrelevant in this respect. Results are robust to alternative measures of technical and allocative efficiency.

This paper tests whether stock prices reflect investor's expectations regarding the value of real options. The analysis is implemented based on a sample of 391 high-tech companies listed on main OECD stock markets during the period December 1994 through December 2000. Results confirm the predicted relation between the fraction of a firm's market value not accounted for by its assets-in-place, and a series of variables that are assumed to disclose its real options value, variables such as research and development activity, risk and skewness of stock returns, and size. The results are robust even after controlling for valuation date, sub-industry, country, and alternative measures of risk.

This paper aims to examine how investors’ expectations about the value of a firm's real options are reflected in the price of its stocks. If the real-option approach is correct, then the efficient-...

We test hypotheses about the structure of corporate debt ownership and the use of bank debt by firms in a civil-law country, Spain. We focus on bank debt effects in the presence of information asymmetries and agency costs, and on efficient versus inefficient firm liquidation. We find that the relation between growth opportunities and bank financing is not as strong as the one found in common-law countries, that there is a positive relation between firm size and the proportion of bank debt used, and that firms closer to bankruptcy and highly leveraged are more likely to use bank debt.

This paper analyses the influence of financial leverage decisions, dividend payout policies and the ownership structure on the firm market value when companies either face, or do not face, profitable growth opportunities. A sample of 101 large non-financial publicly-traded Spanish companies is used. The results confirm the relevance of debt and dividends in terms of firm value creation by showing a negative relationship between firm value and both leverage and dividend payments in the presence of growth opportunities. On the contrary, this relationship turns out to be positive when firms have no profitable investment projects. The results also demonstrate the relevance of ownership structure in the allocation of firm resources.

The aim of the paper is to analyze the Chilean firms’ financial decisions on market value. The economic environment considers both the absence and existence of growth opportunities for a panel of 180 quoted Chilean companies during the period 1990 - 2001. Our results support the disciplinary view of debt in absence of profitable growth opportunities (overinvestment problem) and their investment inhibit effect in the contrary case (underinvestment and asset substitution problems). Furthermore, we find a positive and non-lineal relationship between ownership structure and the firm value for the case of low growth opportunities firms.