Received: 3 June 2019 Revised: 20 May 2020 Accepted: 26 August 2020

DOI: 10.1111/faam.12269

RESEARCH ARTICLE

The role of boards in the financial vulnerability of

nonprofit organizations

Inigo Garcia-Rodriguez M. Elena Romero-Merino

Marcos Santamaria-Mariscal

Faculty of Economics and Business

Administration, University of Burgos, Burgos,
Spain
Correspondence
Inigo Garcia-Rodriguez, Department of Econ-
omy and Business Administration, Faculty
of Economics and Business Administration,
University of Burgos, C/Parralillos s/n 09001
Burgos, Spain.
Email: inigogr@ubu.es
Abstract
Prior literature on nonprofit organizations (NPOs) has
focused on the effect of board composition on organizational
efficiency. However, this research is focused on presenting
an analysis of the relationship between the financial vulner-
ability of NPOs and their boards. Although studies of for-
profit organizations have confirmed this relationship both
theoretically and empirically, it is a novel one in the litera-
ture regarding nonprofit entities. We apply a multitheoret-
ical approach to explain the dual role of the board (providing
both advice and monitoring operations) and a multidimen-
sional model of financial vulnerability. To this end, we use
an original hand-collected database of 64 NPOs from Spain
and 800 board members. Contrary to our expectations, our
results do not support the existence of a significant relation-
ship between board composition (in terms of board structure
and directors’ experience and education) and the financial
vulnerability of NPOs.

KEYWORDS
boards, financial vulnerability, governance, nongovernmental for
development organizations, nonprofit organizations

1 INTRODUCTION

Since the pioneering works of Daily and Dalton (1994a, 1994b) were written, many authors have attempted to pro-
vide a definitive answer to questions about the role of boards in the reduction of bankruptcy risk and costs. Although
these studies are far less prolific than those focused on analyzing the effect of boards on corporate performance, they

Financial Acc & Man. 2020;1–25. wileyonlinelibrary.com/journal/faam © 2020 John Wiley & Sons Ltd 1
2 GARCIA-RODRIGUEZ ET AL .

become salient when economic prosperity gives way to a financial crisis and concerns about improving corporate per-
formance are sidelined due to worries about financial survival.
The literature on nonprofit organizations (NPOs) is often a step behind the literature on the for-profit sector.
Although there is some research on the influence of boards on NPOs’ performance (or efficiency), in the context of
financial concerns, the literature is almost nonexistent. This lack of specific studies on nonprofit bankruptcy risk could
be a result of the absence of robust indicators to measure it or the widespread belief that NPOs should focus on their
organizational goals (forgetting that financial sustainability is needed to achieve them). However, when the last eco-
nomic and financial crisis caused a difficult scenario for NPOs, the literature on insolvency and financial vulnerability
began to grow.
Before questioning which kind of board could avert the financial failure of an NPO, the authors searched for indi-
cators that allow assessment of bankruptcy risk in advance. In fact, researchers could not study bankruptcy because of
the general absence of legal registers of bankrupt NPOs (Hager, 2001; Prentice, 2016a), so they began analyzing the
concept of financial vulnerability, which is similar to financial distress in the for-profit field. This research trend began
in the 1990s (Tuckman & Chang, 1991), considerably later than in the for-profit sector (Altman, 1968; Beaver, 1968).
Some researchers addressed the financial vulnerability of NPOs before the last financial crisis (among others, Green-
lee & Trussel, 2000; Keating, Fischer, Gordon, & Greenlee, 2005). From then on, increasing attention has been paid
to this issue, especially following insolvency cases in this sector,1 which has caused some to contemplate the need to
change how some activities are financed.
Even as the volume of literature on nonprofit financial vulnerability antecedents has grown, it has remained far
from conclusive (Jegers, 2008), and it is beginning to become necessary to identify which factors influence an NPO’s
vulnerability to eliminate such vulnerabilities, if possible. Specifically, we propose analyzing whether a board of direc-
tors (in terms of structure and composition) can avoid financial vulnerability by functioning as the main internal gov-
ernance system of an organization. The board, which is the apex of the organization, is the guarantor of the well-being
of the company (Jensen, 1993), thus it is the responsible party if the organization it governs suffers from financial dis-
tress or goes bankrupt (Simpson & Gleason, 1999), as both situations are considered extreme cases of poor organiza-
tional performance (Lajili & Zéghal, 2010). Furthermore, the prescriptive literature identifies financial monitoring and
planning as one the main responsibilities of an NPO’s board (among others, Coombes, Morris, Allen, & Webb, 2011;
Miller-Millesen, 2003). Therefore, our goal in conducting this study is to analyze the differences between the board
composition of financially vulnerable NPOs with reference to financially healthy ones as well as the impact that board
composition has on the probability of an NPO being classified as financially vulnerable.
Since the relationship between a board and an organization’s financial problems has been previously tested in the
for-profit sphere, we propose to use the same theoretical frameworks that have already been tested (specifically, we
refer to the resource dependence approach and the agency theory, as they are the two most common theoretical
frameworks for corporate governance) while adapting their reasoning to the reality of the nonprofit sector. Among
the differences between the for-profit and nonprofit sectors, we must first note that directors may not be remuner-
ated for their work in the latter, so their time and attention might be limited. Moreover, the fact that the organizational
goals of the NPOs prevail over their financial ones, could make board members more involved in guiding the organi-
zation to its organizational aims than to its financial well-being. The boards of NPOs also have responsibilities outside
of those traditionally borne by firms—e.g., fundraising or co-opting resources, developing key contacts (Hyndman &
McDonnell, 2009; Mintzberg, 1983), etc. These supplementary roles assumed by the board may be especially relevant
in the nonprofit sector, where there are not stable shareholders but rather punctual donors who decide each year if it
is worthwhile to continue giving money to an organization and, if so, which entity deserves their donations.
We use a sample of Spanish nongovernmental for development organizations (NGDOs) to test our hypotheses
about the potential effects of board composition (in terms of size, independence, duality, gender diversity, and knowl-
edge and experience) on NPOs’ financial vulnerability. However, in contrast to prior literature on the for-profit sector,

1 For example, Hull House in Chicago, Visiting Nurse Association of Long Island and FUNDESO in Spain.
GARCIA-RODRIGUEZ ET AL . 3

our results show no significant connection between board composition and NPOs’ financial problems. Additionally,
we do not find that any governance variable has explanatory power on the likelihood of an NPO being classified as
financially vulnerable.
The remainder of the article is organized as follows. We begin with a literature review related to NPOs’ governance
and likelihood of experiencing financial vulnerability. Afterwards, we explain the sample, variables, and methodology
we use, and we present our results later. Finally, we discuss the results, and we present the main conclusions derived
from this research as well as its limitations and possible areas for future research.

2 LITERATURE REVIEW AND HYPOTHESIS DEVELOPMENT

2.1 Financial vulnerability of nonprofit organizations

Financial vulnerability has scarcely been studied in the nonprofit sector in comparison with the broad literature
related to bankruptcy and financial distress in for-profit companies (Andrés-Alonso, Garcia-Rodriguez, & Romero-
Merino, 2015). Although this issue requires further investigation (Gordon, Fischer, Greenlee, & Keating, 2013), its
prominence in the literature on NPOs has continuously increased since Tuckman and Chang’s seminal study (1991)
was published. It is important to highlight that, while it has always been possible to study the beginnings of bankrupt-
cies and, afterwards, the financial distress they caused, in the for-profit sphere, researchers studying nonprofits have
had to analyze the financial difficulties of NPOs (financial vulnerability) directly due to the great difficulty inherent
in measuring inactive and defunct entities, as, to our knowledge, there are no countries that publish an official list of
bankrupt NPOs (Hager, 2001; Prentice, 2016a). The most predominant traditional operationalizations are “significant
reduction in net assets” (among others, Andrés-Alonso et al., 2015; Keating et al., 2005; Trussel, 2002), “reduction
in program expenses” (Andrés-Alonso et al., 2015; Greenlee & Trussel, 2000; Keating et al., 2005), “reduction in rev-
enues” (Keating et al., 2005), and “insolvency” (Gordon et al., 2013; Keating et al., 2005). All of these variables have
been operationalized in a wide range of distinct ways, with an organization’s reduction in net assets as the most-used
proxy in the previous literature. Nevertheless, as Andres-Alonso, Garcia-Rodriguez, and Romero-Merino (2016)) indi-
cate, these variables do not exist in complete isolation, so it is necessary to complement them with information about
other aspects of financial vulnerability. Following this line of thought, the most recent literature reflects a multidimen-
sional approach (Andres-Alonso et al., 2016; Bowman, 2011). In fact, as Prentice (2016b) indicates, it is necessary to
use more than a single variable to measure this kind of construct.

2.2 Importance of the board in nonprofit organizations

Despite the existence of some other mechanisms (e.g., relevant donors, regulation, debt), most articles on NPO gov-
ernance identify the board as the main governance mechanism of such organizations. This is because the board is the
responsible party for both protecting the interests of founders, donors, beneficiaries, and society in general, and lead-
ing the NPO to the achievement of its mission by demonstrating ability and integrity in the fulfillment of its roles
(Andrés-Alonso, Azofra-Palenzuela, & Romero-Merino, 2009; Callen, Klein, & Tinkelman, 2003; O’Regan & Oster,
2002). Furthermore, in the nonprofit sphere, the board generally has a more active role in governance than in the
for-profit field (Coombes et al., 2011; O’Regan & Oster, 2005).
The roles of the board of such an organization have been explained using different theories, but most explanations
have focused on the resource dependence approach and the agency theory. Each of these approaches assigns a dif-
ferent main role to the board, those of providing advice and monitoring operations, respectively. Nevertheless, during
the past decade, several authors have proposed the idea of adopting a multitheoretical approach to explain the roles of
the boards of NPOs in a larger and more accurate way (Brown, 2005; Callen, Klein, & Tinkelman, 2010; Van Puyvelde,
4 GARCIA-RODRIGUEZ ET AL .

Caers, Du Bois, & Jegers, 2012). Hence, the optimal board composition (i.e., one that allows it to effectively develop
a dual role as supervisor and strategist) is defined using arguments based on the agency theory (board size and inde-
pendence) and elements from the resource dependence approach, such as human capital (education and experience
of board members) and relational capital (experience on the boards of other organizations) (Andrés-Alonso, Azofra-
Palenzuela, & Romero-Merino, 2010).
As we have already noted, the previous literature on NPOs has traditionally focused on the relationship between
the board and an NPO’s efficiency (among others, Andrés-Alonso, Martín-Cruz, & Romero-Merino, 2006; Brown,
2005; Callen et al., 2003, 2010). To our knowledge, only Hodge and Piccolo (2005, 2011) have studied the impact of
board effectiveness and private contributions on an organization’s likelihood of suffering from financial vulnerability,
although these authors focused on board functioning instead of board composition.
In contrast, in the for-profit sector, the effect of the board has previously been studied in relation to organizational
performance and the bankruptcies and financial difficulties suffered by companies (among others, Daily & Dalton,
1994a, 1994b; Darrat, Gray, Park, & Wu, 2016; Lajili & Zéghal, 2010; Lee & Yeh, 2004; Platt & Platt, 2012; Simpson
& Gleason, 1999). Following their arguments, we propose here to analyze whether the variables they use to describe
corporate boards can also explain similar phenomena in the nonprofit sector. Thus, our general hypothesis is that board
composition is related to an NPO’s level of financial vulnerability, but we disaggregate it into various specific aspects,
some of them derived from the traditional agency theory (board structure) and resource dependence approach (expe-
rience and knowledge of directors).

2.3 Board structure

When the role of boards is analyzed with a focus on agency, it is usually described using variables, such as board size
and independence as well as chief executive officer (CEO) duality or directors’ ownership of the organization. Using
only agency-related arguments, the expected influence of these variables on financial vulnerability is relatively clear,
but, when we combine them with the resource dependence approach, the expected effects are puzzling. Accordingly,
the arguments derived from the two theories support opposite effects of board size on an organization’s financial
health (De Maere, Jorissen, & Uhlaner, 2014; Gales & Kesner, 1994; Platt & Platt 2012). On the one hand, the agency
theory holds that a small board is beneficial for the well-being of an organization because it enables a quick, active
decision-making process that reinforces its monitoring role. By contrast, large boards require a slower process. On the
other hand, according to the resource dependence approach, a large board allows the participation of members with a
greater volume of skills and expertise, which could improve its decisions, while such an accumulation of experience is
much less likely to be present in small boards. Therefore, as both boards that are too small and those that are too large
could be disadvantageous, we hypothesize that

H1. Board size has a curvilinear relationship with an NPO’s level of financial vulnerability, such that both small
and large boards have positive effects on an NPO’s level of financial vulnerability.

The effect of board independence on financial health, in contrast to board size, is reinforced by both theories.
Agency-oriented arguments contend that a relatively independent board has a positive effect on the financial health
of an organization because external directors might monitor the work of the management team better than if they
were insiders (Chancharat, Krishnamurti, & Tian, 2012; Platt & Platt, 2012). Such outsiders can also provide an NPO
with additional resources (human and relational capital) to add to those to which the organization already has access
because of its insider directors, so the former’s advice might be particularly useful. Thus, we expect that

H2. Board independence has a negative effect on an NPO’s level of financial vulnerability.
GARCIA-RODRIGUEZ ET AL . 5

Using an agency-oriented approach, CEO duality is understood as a severe lack of independence. CEO duality indi-
cates a decrease in board oversight, which can lead to an increase in an organization’s financial vulnerability (De Maere
et al., 2014; Krause, Semadeni, & Cannella, 2014). By contrast, the resource dependence approach holds that such
duality favors the leadership of an organization and, therefore, fosters its effectiveness (Krause et al., 2014) and allows
rapid responses to crises (Dowell, Shackell, & Stuart, 2011). Consequently, we hypothesize that

H3a. CEO duality has a negative effect on an NPO’s level of financial vulnerability.
H3b. CEO duality has a positive effect on an NPO’s level of financial vulnerability.

The authors of the for-profit literature on boards and financial difficulties have also considered other variables
related to ownership (e.g., the percentage of stocks owned by board members), which supports the existence of a “dual
role” for directors. On the one hand, such a framework aligns the interests of directors and organizations. On the other
hand, it might pose a threat to an organization when excessive risks are taken to increase directors’ profits (Platt &
Platt, 2012), which could lead to increased financial vulnerability. Although this literature cannot be directly applied
to NPOs, it can be related to the presence of founders on the board of an organization. In this context, founders might
feel like owners because they founded the organization. However, as they cannot obtain monetary profits from their
positions, they might only be motivated to ensure that their NPOs endure throughout the years by avoiding financial
risks. Furthermore, the literature on firm performance also shows a positive effect stemming from the founding nature
of CEOs (Adams, Almeida, & Ferreira, 2009; He, 2008). For these reasons, we argue that

H4. The presence of founders on an organization’s board has a negative effect on its level of financial vulnerability.

The authors of prior studies have also considered the possibility that gender diversity among board members
might improve a board’s functioning, given the presence of multiple perspectives, views, and ideas (Buse, Bernstein,
& Bilimoria, 2016; Carter, Simkins, & Simpson, 2003; Reguera-Alvarado, de Fuentes, & Laffarga, 2017). In this way, gen-
der diversity is thought to improve the problem-solving process (Poletti-Hughes & Briano-Turrent, 2019; Westphal &
Milton, 2000). Regarding the agency theory, a diverse board might improve its monitoring role as a consequence of its
broad range of perspectives (Reguera-Alvarado et al., 2017); in the same way, according to the resource dependence
approach, gender diversity may enhance the wide variety of relationships between directors and external stakehold-
ers (among them, financial creditors). Therefore, according to both theories, gender diversity among board members
results in improved functioning of the board (Adams & Ferreira, 2009; Cruz, Justo, & De Castro, 2012; Jizi & Nehme,
2017; Poletti-Hughes & Briano-Turrent, 2019), which is likely to improve organizational financial performance (Jizi &
Nehme, 2017; Terjesen, Sealy, & Singh, 2009). Moreover, gender-diverse boards are associated with a lower probabil-
ity of risk-taking behaviors (Elmagrhi et al., 2018; Oyotode-Adebile & Raja, 2019). Therefore, we hypothesize that

H5. Boards with a higher level of gender diversity are negatively related to an NPO’s level of financial
vulnerability.

2.4 Board experience and education

Directors provide the board with their personal experience, that is, their human and social capital. Board capital can
have a positive impact on both the advisory and monitoring roles of the board (Hillman & Dalziel, 2003). In particular,
directors’ skills, previous experience, and expertise can enhance the quality of their advice (Brown, Hillman, & Okun,
2012; Gales & Kesner, 1994; Hillman & Dalziel, 2003), and the presence of members with specific expertise and expe-
rience in certain financial situations may improve the board’s ability to monitor the managerial team in such circum-
stances (Haynes & Hillman, 2010), increasing the board’s effectiveness (Fredette & Bradshaw, 2012). More specifically,
the financial health of NPOs is likely to improve in the presence of directors with experience in the decision-making
6 GARCIA-RODRIGUEZ ET AL .

process, those with experience in the financial field, and those with experience in the specific subsector in which an
NPO operates (Harris, 2014; Oehmichen, Schrapp, & Wolff, 2017; Platt & Platt, 2012; Ritchie & Eastwood, 2006).
Accordingly, we expect that

H6a. Boards with a higher proportion of directors with experience in decision-making processes are negatively
related to the level of financial vulnerability of NPOs.
H6b. Boards with a higher proportion of directors with experience in finance are negatively related to the level of
financial vulnerability of NPOs.
H6c. Boards with a higher proportion of directors with experience in the specific subsector in which an organization
operates are negatively related to the level of financial vulnerability of NPOs.

As in the previous case, the directors’ formal educational background may impact the board’s effectiveness
(Hillman & Dalziel, 2003). When they have received specific education in economics or a field related to the function-
ing of NPOs, directors possess additional resources that may allow them to carry out their roles (monitoring managers
and contributing to the financial strategy of the NPO) in a more effective manner than those with another education.
Moreover, a higher level of formal education implies a deeper ability to process and apply information to an issue and
address complex environments (Hambrick & Mason, 1984; Ritchie & Eastwood, 2006; Wally & Baum 1994), which may
also improve the quality of directors’ performance. Therefore, we argue that

H7. Boards with a higher proportion of directors who have attained specific education or a higher level are nega-
tively related to the level of financial vulnerability of NPOs.

3 SAMPLE, VARIABLES, AND METHODOLOGY

3.1 Sample

In this research, we study a specific field in the nonprofit sector: international cooperation for development. The orga-
nizations in our sample, namely NGDOs, work to provide international cooperation and humanitarian aid in underde-
veloped countries. We also focus our study on a single country, Spain, where NGDOs have suffered from reductions
in both public subsidies and private donations (Garcia-Rodriguez & Romero-Merino, 2018). Our sample is composed
of NGDOs that belonged to the Spanish platform of NGDOs (CONGDE) in 2011. Among them, we have only included
those that made information about their board composition and annual accounting and financial status available from
2011 to 2013. Based on these criteria, we selected 65 organizations, but we excluded one as an outlier because of its
extremely low values for the dependent variables; thus, our final sample was composed of 64 Spanish NGDOs and 800
board members, 10 of whom served on the boards of two organizations in the sample simultaneously.
The data were manually collected. The data regarding the board members’ curricula vitae were obtained from the
website of each organization and finalized using information found via web search engines. The financial variables
were calculated using the NGDOs’ financial statements—they are audited in all the cases of the sample—which are
publicly available on their websites and in their annual reports. Information related to revenue was obtained from the
annual reports that CONGDE publishes. Finally, we obtained the age of each NGDO from its website.

3.2 Variables

The main hurdle in the definition of variables is determining how to measure the one that must be explained, that
is, financial vulnerability. Following the most recent literature (Andres-Alonso et al., 2016; Bowman, 2011; Prentice,
GARCIA-RODRIGUEZ ET AL . 7

2016b), we use a multidimensional approach to measure it. Specifically, we follow the model of Andres-Alonso et al.
(2016), who has made one of the most recent contributions to the literature in this field, and we consider financial vul-
nerability along the following three dimensions: a reduction in net assets of at least 20% from 2011 to 2013 (VARNA)
(operational vulnerability); a value lower than 1.5 for the ratio of total assets divided by total debt (TATD) (leverage
vulnerability); and a value lower than 1.5 for the ratio of current assets divided by short-term debt (CASD) (liquidity
vulnerability).2 We created a dummy variable for each of these dimensions that takes the value “1” if the NGDO fulfills
the criterion (i.e., it is in a vulnerable position); otherwise, it is “0.” Then, for each organization, we add the values of the
previous three variables, obtaining a value between 0 and 3 (ordered from lowest to highest financial vulnerability).
Finally, we group the results into two categories: “financially not vulnerable organizations” (values of “0” and “1”) and
“financially vulnerable organizations” (values of “2” and “3”).3
As Table 1 shows, to measure a board’s structure, we consider its size (in natural logarithm) and degree of inde-
pendence (LBOARDSIZE and INSIDER, respectively), the duality of the CEO/chairman of the board (DUALITY), the
presence of founders on the board (FOUNDER), and the gender diversity of the board (BLAU). We quantify direc-
tors’ experience by measuring the number of executives and members of other boards, both in companies and NPOs
(EXEC_COMP, EXEC_NPO, BOARD_COMP, and BOARD_NPO). We presume that all of them are usually involved in
complex decision-making processes. In the same way, we also study the types of experience that may be relevant to
preventing and addressing financially distressing situations. Specifically, we calculate the number of directors who
work in the field of banking, insurance, or finance (BANKING) and those with professional (not volunteer) experience
in international cooperation (COOP) (specialized experience). Regarding the educational background of board mem-
bers, we include the number of directors with degrees in economics and business (ECO) and those with specific con-
centrations in international cooperation or the management of NPOs (NPOSTUDY) (specialized education). We also
consider the mean of the directors’ educational level (EDUCGRADE). To calculate this variable, we first assess each
director’s educational background and assign it a rating between 0 and 3 (“3” for PhD, “2” for master’s degree, “1” for
bachelor’s degree, and “0” otherwise); afterwards, we calculate the mean of the board members.
Finally, we introduce five control variables that are usually considered predictors of financial vulnerability: orga-
nizational size (LNGDOSIZE), measured as the natural logarithm of total assets; age of the organization (LAGE), as
the natural logarithm of years of activity; operational margin (MARGIN); revenue concentration (REVCON), which we
measure using a Herfindahl Index that includes seven sources of revenue4 (1 being the most concentrated and 1/7 the
most diversified); and the proportion of revenue from public funding (PUBLIC). According to the traditional literature,
organizational size, age, margin, and public funding have negative effects on an organization’s level of financial vulner-
ability (Burde, Rosenfeld, & Sheaffer, 2017; Kingma, 1993; Tevel, Katz, & Brock, 2015; Trussel, 2002; Yan, Denison, &
Butler, 2009), while a high degree of revenue concentration tends to indicate a high level of vulnerability5 (Tuckman &
Chang, 1991).

3.3 Methodology and model

In this study, we classify NGDOs as financially vulnerable (or not vulnerable), grouping them into two categories. We
first compare the board composition of both groups using a Mann–Whitney test (instead of a t-test, due to the sample
size), and, afterwards, we estimate a logistic regression in which FINVULN is the dichotomous-dependent variable. As

2 We choose the value 1.5 because it is used by the Spanish Agency for International Development Cooperation during the accreditation process of NGDOs.

3 We have performed some complementary analyses as robustness tests that are available upon request. In particular, we have calculated both CASD and
TATD by using 1.0 as cutoff value. The results remain the same in all the cases.
4 International public funds, national public funds, regional and local public funds, periodic and child sponsorship, one-time donations, contributions from

other private organizations, and revenue from sales and services.

5 Traditional literature on financial vulnerability only considers the positive aspects of revenue diversification. However, recent literature (e.g., Andrés-Alonso,

Garcia-Rodriguez, & Romero-Merino, 2015) discusses this topic and shows both the positive and negative consequences of revenue diversification.
8 GARCIA-RODRIGUEZ ET AL .

TA B L E 1 Variables

Name Definition
Dependent variables
VARNA Dummy variable that takes “1” if the NGDO has experienced a reduction of its net assets of
at least 20% during the 2011–2013 period and “0” otherwise
TATD Dummy variable that takes “1” if the value of the ratio of total assets/total debt in 2013 is
lower than 1.5 and “0” otherwise
CASD Dummy variable that takes “1” if the value of the ratio of current assets/short-term debt in
2013 is lower than 1.5 and “0” otherwise
FINVULN Dummy variable that takes “1” if the sum of the three previous ones (VARNA, TATD, and
CASD) is two or three and “0” otherwise
Independent variables (all measured in 2011)
LBOARDSIZE Size of the board, measured by the number of members (in logarithm)
INSIDER Percentage of members who work for the same NGDO
DUALITY Dummy variable that takes “1” if the chairman of the board is also the CEO of the NGDO
and “0” otherwise
FOUNDER Percentage of members who are founders of the NGDO
BLAU Gender diversity of the board as measured by the Blau Index: 1 − [(percentage of women)2
+ (percentage of men)2 ].
EXEC_COMP Percentage of members with experience as managers of companies
EXEC_NPO Percentage of members with experience as managers of NPOs
BOARD_COMP Percentage of members with experience on the boards of companies
BOARD_NPO Percentage of members with experience on the boards of other NPOs
BANKING Percentage of members with professional experience in banking, insurance, or finance
COOP Percentage of members with professional experience in an NGDO
ECO Percentage of members with higher education in economics or business
NPOSTUDY Percentage of members who pursued specific studies related to NPOs
EDUCGRADE Mean of members’ educational level (PhD = 3; master’s = 2; bachelor’s = 1)
Control variables (all measured in 2011)
LNGDOSIZE Total assets of the NGDO (in euros) (in logarithm)
LAGE Age of the NGDO (in years) (in logarithm)
MARGIN Operational margin measured as (Revenues − Expenses)/Revenues
REVCON Revenue concentration (Herfindahl Index based on seven sources of revenue)
PUBLIC Percentage of revenue from public funding

can be seen in the model, we analyze board composition 2 years prior (in 2011) to the organization being classified as
financially vulnerable or not vulnerable (in 2013)6 :
FinancialVulnerabilityit = b0 + b1 ∗ Boardsizeit−2 + b2 ∗ Dualityit−2 + b3 ∗ Independenceit−2 + b4 ∗ Founderit−2 +
b5 ∗ Genderdiversityit−2 + b6 ∗ Experienceit−2 + b7 ∗ Educationalbackgroundit−2 + b8 ∗ Controlvariablesit−2 + 𝜀it−2 ,

6 The literature on for-profit organizations has considered a wide range of time frames to measure governance variables, that is, from 1 to 5 years before a

company begins experiencing financial problems.

GARCIA-RODRIGUEZ ET AL . 9

TA B L E 2 Descriptive statistics

Variable Mean Median Minimum Maximum Standard deviation

Financial vulnerability variables
Variation of net Assets 113.67% −25.20% −111.18% 6,356.57% 816.29%
Total assets/total debt 17.12 3.43 0.53 137.60 30.49
Current assets/short-term debt 15.61 2.71 0.59 121.24 26.99
VARNA 0.55 1.00 0.00 1.00 0.50
TATD 0.39 0.00 0.00 1.00 0.49
CASD 0.36 0.00 0.00 1.00 0.48
FINVULN 0.38 0.00 0.00 1.00 0.49
Board composition
BOARDSIZE 12.50 10.00 4 56 9.03
INSIDER 6.17 0.00 0.00 40.00 9.09
DUALITY 0.09 0.00 0.00 1.00 0.29
FOUNDER 7.27 0.00 0.00 75.00 13.44
BLAU 0.37 0.42 0.00 0.50 0.14
EXEC_COMP 17.71 7.18 0.00 100.00 23.69
EXEC_NPO 12.29 10.56 0.00 50.00 11.27
BOARD_COMP 12.14 0.00 0.00 91.07 20.07
BOARD_NPO 28.99 27.70 0.00 81.82 21.74
BANKING 9.12 0.00 0.00 63.63 13.81
COOP 13.27 9.09 0.00 100.00 17.85
ECO 20.95 14.29 0.00 100.00 22.10
NPOSTUDY 7.14 0.00 0.00 42.86 11.06
EDUCGRADE 1.34 1.33 0.30 2.11 0.38
Control variables
NGDOSIZE 24,071,579.78 6,364,165.28 14,781.65 719,768,000.00 89,779,400.56
AGE 29.52 23.50 12 147 21.41
MARGIN 0.01 0.00 -0.74 0.47 0.20
REVCON 0.49 0.43 0.25 1.00 0.21
PUBLIC 54.35 63.66 0.00 100.00 34.06

4 RESULTS

4.1 Descriptive results

As we have previously mentioned, the data used in this study were collected manually because there are no stan-
dardized databases available for this sector; thus, we believe that the descriptive results not only provide a descrip-
tion of the financial structure of Spanish NGDOs but also of board composition in terms of directors’ background and
experience.
We observe in Table 2 that the mean of the net assets’ variation represents an increase of 114%, although this figure
is somewhat misleading because the median shows a decrease of 25% and 35 of the 64 NGDOs (55%, as can be seen in
Table 2 as the mean of VARNA) experienced a reduction in net assets of at least 20%. Regarding NGDOs’ leverage, their
10 GARCIA-RODRIGUEZ ET AL .

total assets are, on average, 16.86 times larger than their total debts. This value reflects a more promising situation
than the previous dimension, although it masks high data dispersion because 25 organizations (39%, as shown in the
mean of TATD in Table 2) have a ratio of total assets to total debt that is lower than 1.5. Finally, 23 of the 64 NGDOs
(36%, as we observed in Table 2 as the mean of CASD) have a ratio of current assets to short-term debt that is lower
than 1.5. This ratio has a mean value of 15.61 (or a median of 2.71), which, as in the case of total assets and debt, reveals
a generally satisfactory situation. When we consider the three dummies related to financial vulnerability jointly, as we
have shown in Table 1, we find that 24 NGDOs (38%) are classified as financially vulnerable (11 organizations are
highly vulnerable, as they have problems related to all three dimensions, and 13 are only somewhat vulnerable, with
problems related to two of them) and 40 NGDOs (62%) are not vulnerable (24 are slightly vulnerable, as they have
problems related to one variable, and 16 are healthy, as they are not experiencing any financial difficulties according
to these dimensions).
Regarding the boards of the NGDOs in this sample, the average size is 13 members7 and there is a low proportion
of insiders (6%). The CEOs of six NGDOs (9%) are also their chairmen, and founders represent 7% of the board mem-
bers (there is at least one founder on the board in 25 organizations, which is 39% of the sample). On average, 41%
of board members are women, a value that barely reaches the recommendation given by CONGDE (2012),8 but the
Blau index varies from 0.00 (null diversification) to 0.50 (equal proportion of women and men). According to our data,
on average, there are more directors with experience as top executives in companies (17%) than in NPOs (13%). By
contrast, regarding their experience as directors of other boards, there are fewer directors with experience serving on
companies’ boards (12%) than on boards of other NPOs (29%). Moreover, 9% of the directors have worked in bank-
ing, insurance, or finance, and 14% have worked in international cooperation (this figure includes the 6% composed
of insiders). Finally, regarding educational attainment, only 7% of board members have pursued specialized studies in
international cooperation or NPOs, and 21% have studied business or economics. The average educational level is 1.3,
which implies that, on average, all boards are composed of members who have at least a bachelor’s degree.
Finally, the mean value of the assets of the NGDOs is 24 million euros, although variability is quite high (from fewer
than 15,000 euros to more than 700 million euros). Their average age is 30 years, they have a slightly positive margin
(0.01), and their revenue concentration is 0.49, showing a generally high level of diversification of revenue sources.
Another indicator that diversified structures of revenue are common is the balance between public and private funding
(54% and 46%, respectively), although there are some extreme cases (NGDOs without any public or private revenue).
After conducting this descriptive analysis and following the examples of other studies (Chancharat et al., 2012; De
Maere et al., 2014; Lajili & Zéghal, 2010; Lee & Yeh, 2004; Platt & Platt, 2012), we undertake a mean test of the pre-
vious variables while comparing the board composition of financially vulnerable NGDOs with respect to healthy ones.
Because of the small size of our sample, we use a nonparametric Mann–Whitney test (24 vulnerable organizations vs.
40 nonvulnerable ones). As we can see in Table 3, neither the variables related to the board composition of NGDOs
nor the control ones show significant differences between vulnerable and healthy organizations.

4.2 Explanatory results

Despite the fact that the results we obtained in the previous test are not very promising, we conduct a logit anal-
ysis to determine whether the variables related to board composition influence NGDOs’ level of financial vulner-
ability (dummy FINVULN). This relationship contains fewer endogeneity problems than the traditional relationship
between board composition and organizational efficiency. Donors tend to only perceive the “general well-being” of an
organization, while its financial situation is more difficult to determine (Andreoni & Payne, 2011, p. 338). The same
argument can be applied to directors, who may choose the entity they provide service to for reasons of visibility, repu-

7 Along the descriptive analysis, we measure LBOARDSIZE, LNGDOSIZE, and LAGE without logarithms (i.e., BOARDSIZE, NGDOSIZE, and AGE, respec-
tively).
8 CONGDE recommends that boards include a proportion of women between 40% and 60%.
GARCIA-RODRIGUEZ ET AL . 11

TA B L E 3 Mann–Whitney test

Vulnerable NGDOs (n = 24) No vulnerable NGDOs (n = 40)

Variable Mean Median Mean Median Significance
VARNA 0.54 1.00 0.55 1.00 –
***
TATD 0.96 1.00 0.05 0.00
***
CASD 0.96 1.00 0.00 0.00
***
FINVULN 1.00 1.00 0.00 0.00
BOARDSIZE 12.67 10.50 12.40 9.00 –
INSIDER 6.79 0.00 6.47 0.00 –
DUALITY 0.04 0.00 0.13 0.00 –
FOUNDER 6.24 0.00 7.88 0.00 –
BLAU 0.35 0.41 0.38 0.42 —
EXEC_COMP 15.42 7.63 19.09 4.55 –
EXEC_NPO 11.11 9.09 13.00 12.92 –
BOARD_COMP 10.39 0.00 13.19 2.94 –
BOARD_NPO 28.40 29.29 29.33 24.50 –
BANKING 7.78 0.00 9.92 3.85 –
COOP 12.17 7.42 13.93 12.10 –
ECO 18.34 13.39 22.52 17.14 –
NPOSTUDY 5.39 0.00 8.19 0.00 –
EDUCGRADE 1.33 1.36 1.35 1.29 –
NGDOSIZE 11,733,458.13 6,206,018.93 31,474,452.77 6,364,165.28 –
AGE 26.42 21.50 31.38 25.00 –
MARGIN 0.01 0.00 0.01 0.00 –
REVCON 0.46 0.39 0.52 0.44 –
PUBLIC 57.54 63.66 52.10 57.10 –

***
: Significant difference with a level of confidence of 99%.

tation, or efficiency (beyond their organizational missions) but rarely for its impact on the financial health of the orga-
nization. Moreover, we study board composition in 2011, 2 years before the NGDOs were classified as vulnerable (or
not). The potential multicollinearity problems and the intuitive relationship between the dependent variable and each
of the explanatory ones can be observed in the matrix of bivariate Pearson correlations in Table 4.
As we can see in Table 4, the lack of significant correlation between the variable for financial vulnerability (FIN-
VULN) and those related to board composition corroborates the results of the Mann–Whitney test. We also observe
some high values between independent variables, which could present potential problems of multicollinearity if we
wanted to estimate our global model overall. Considering these conditions, we separate the variables into groups,
creating several partial models. In this way, we can test each hypothesis in isolation.9 Even so, as Hypothesis 6a (rele-
vance of experience to efficiency in decision-making positions) is measured through several variables with these kinds
of problems, we separate the variables regarding the subjects’ experience as board directors (Column 6 of Table 5) or
top executives (Column 7 of Table 5) of both companies and NPOs. Moreover, we use the variation inflation factors

9 We include the squared term of LBOARDSIZE (LBOARDSIZE_SQ) to test the expected curvilinear relationship between board size and financial vulnerabil-

ity (H1).
 12

TA B L E 4 Bivariate correlation matrix

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
1. FINVULN –
2. LBOARDSIZE .10 –
3 INSIDER −.04 −.27* –
4. DUALITY −.14 −.16 .48** –
5. FOUNDER −.06 −.35** .29* .16 –
6. BLAU −.11 −.06 −.04 −.09 −.02 –
7. EXEC_COMP −.08 .24 −.14 −.04 .05 −.34** –
* ** **
8. EXEC_NPO −.08 −.34 .38 .20 .35 −.09 .19 –
** * **
9. BOARD_COMP −.07 .28 −.14 .01 −.03 −.25 .78 .07 –
10. BOARD_NPO −.02 .28* .03 −.03 .10 −.11 .25* −.09 .38** –
** **
11. BANKING −.08 .23 −.16 −.08 −.10 −.09 .58 .10 .69 .24 –
12. COOP −.05 −.27* .48** .27* .16 .08 −.13 .53* −.07 −.23 −.02 –
** ** ** * **
13. ECO −.09 .04 .03 .18 .22 −.19 .70 .43 .65 .27 .62 .09 –
** * *
14. NPOSTUDY −.12 −.23 −.05 .01 .37 −.08 −.07 .30 −.24 −.19 −.21 .27 −.01 –
15. EDUCGRADE −.03 −.6 −.02 .12 −.21 −.24 .43** .20 .25* .09 .04 −.13 .40** −.08 –
**
16. LNGDOSIZE .04 .34 −.19 .11 −.14 .05 .11 −.23 .20 .16 .17 −.14 .13 −.15 .07 –
* ** *
17. LAGE −.11 .26 −.08 −.02 −.35 .19 .00 −.26 .02 −.10 .07 −.15 −.12 −.21 −.06 .19 –
18. MARGIN −.01 .13 .10 −.00 −.18 .02 .16 .07 .05 .11 .06 .01 −.03 −.20 .14 −.03 −.01 –
* * * **
19. REVCON −.13 −.07 .26 .07 .30 −.04 .25 .19 .21 .31 .18 −.03 .32 −.01 .14 −.41 −.10 .11 –
20. PUBLIC .08 −.01 .11 .07 .05 .04 .04 .01 .07 .25 −.01 .05 .09 .14 −.05 .29* −.19 −.12 .17 –
*, **
Significant correlation with a level of confidence of 95% and 99%, respectively.
GARCIA-RODRIGUEZ ET AL .
TA B L E 5 Estimations of logit analysis. Dependent variable: FINVULN

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
LBOARDSIZE 5.107
(3.968)
GARCIA-RODRIGUEZ ET AL .

LBOARDSIZE_SQ −0.928
(0.782)
INSIDER −1.287
(3.157)
DUALITY −1.096
(1.164)
FOUNDER −1.571
(2.459)
BLAU −2.682
(2.140)
EXEC_COMP −0.640
(1.365)
EXEC_NPO −1.199
(2.611)
BOARD_COMP −0.971
(1.656)
BOARD_NPO −0.421
(1.476)
BANKING −1.647
(2.297)
COOP −0.589
(1.655)
ECO −1.994
(1.730)

(Continues)
13
 14

TA B L E 5 (Continued)

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
NPOSTUDY −1.695
(3.157)
EDUCGRADE 0.700
(0.867)
LNGDOSIZE −0.033 −0.067 −0.043 −0.049 −0.073 −0.031 0.000 −0.019 −0.011
(0.190) (0.181) (0.179) (0.178) (0.187) (0.186) (0.193) (0.188) (0.191)
LAGE −0.351 −0.363 −0.380 −0.521 −0.144 −0.489 −0.454 −0.415 −0.570
(0.686) (0.645) (0.646) (0.698) (0.678) (0.681) (0.665) (0.654) (0.714)
MARGIN 0.259 0.242 0.179 −0.050 0.293 0.307 0.264 0.232 −0.295
(1.576) (1.459) (1.444) (1.534) (1.483) (1.476) (1470.) (1.434) (1.515)
REVCON −1.463 −1.699 −1.625 −1.443 −2.103 −1.451 −1.294 −1.525 −1.165
(1.656) (1.663) (1.657) (1.712) (1.792) (1.736) (1.796) (1.733) (1.820)
PUBLIC 0.877 (0.998) 0.787 0.754 0.785 0.964 0.683 0.702 0.683 0.770
(1.011) (1.003) (1.001) (1.084) (1.008) (1.014) (1.027) (1.040)
Constant −5.121 2.336 2.007 2.478 2.739 2.296 1.602 1.883 1.412
(6.599) (3.124) (3.091) (3.157) (3.181) (3.254) (3.162) (3.218) (3.461)
VIF 1.34 1.30 1.26 1.41 1.28 1.35 1.42 1.32 1.44
2
Cox & Snell R 0.074 0.041 0.056 0.046 0.065 0.047 0.048 0.050 0.072
Nagelkerke R2 0.099 0.056 0.075 0.061 0.088 0.064 0.064 0.068 0.097
Percentage of global 56.9% 58.6% 58.6% 56.9% 62.1% 62.1% 67.2% 67.2% 62.1%
correct predictions
GARCIA-RODRIGUEZ ET AL .
GARCIA-RODRIGUEZ ET AL . 15

(VIF) to test the multicollinearity of each model. In all nine models, the dependent variable is FINVULN, which, as we
have previously explained, takes “1” when an organization is financially vulnerable and “0” otherwise; we also include
five control variables. The results of the various logit regressions are presented in Table 5.
As we can observe in Table 5, there are no significant variables in any of the models we consider. These results
support the previously obtained results of the Mann–Whitney test and the correlation matrix, confirming that there
is no relationship between board composition and the financial vulnerability of Spanish NGDOs. In this way, neither
board structure nor the directors’ educational background or experience appears to explain the financial vulnerability
of some NPOs; therefore, these results contradict all our hypotheses. It is also remarkable that none of the control
variables is significant in any model we tested. The previous literature shows that high values for size, age, revenue
diversification, and public funding indicate low financial vulnerability (Tevel et al., 2015; Trussel, 2002; Tuckman &
Chang, 1991), although there are differences between subsectors (Hager, 2001) and countries (Despard, Nafziger-
Mayegun, Adjabeng, & Ansong, 2017; Garcia-Rodriguez & Jegers, 2017). According to our results, these variables do
not seem to have any explanatory power to predict the vulnerability of NGDOs. This result has, likewise, been obtained
by Andrés-Alonso et al. (2015) and might be also explained by differences in contexts (NGDOs in European countries
and during a period of crisis). Finally, we also observe low values for R2 , which confirms the limited predictive power of
board composition and control variables.
To reinforce these results, we used the same models but considered each of the individual dummies of financial vul-
nerability as dependent variables. These results are presented in the Appendix (Tables A.1, A.2, and A.3, respectively),
and, as can be observed, none of the variables related to the board shows significance in any of the models. These
results confirm those obtained when we consider the multidimensional dependent variable.

5 DISCUSSION AND CONCLUSIONS

In this study, we have analyzed the relationship between board composition and the financial vulnerability of Spanish
NGDOs. Although the literature on for-profit organizations confirms this relationship, both theoretically and empiri-
cally, we have not found significant differences between the board structure or composition of financially vulnerable
and healthy NPOs. Our results contrast with those presented in studies on for-profit organizations, as firms’ board
structure and composition have been shown to have an impact on an organization’s vulnerability to financial distress
and bankruptcy. It is possible that these results (or the absence of significant results) stem from differences between
the responsibilities of boards depending on the nature of the organization (firms vs. NPOs). However, in the non-
profit area, the normative literature on NPOs has noted that overseeing financial management and control of financial
resources is one of the main roles of an organization’s board (Cornforth, 2001; Miller-Millesen, 2003; Romero-Merino
& Garcia-Rodriguez, 2016). Thus, the boards of NPOs should have the same responsibility as their for-profit counter-
parts in terms of the use of financial resources, which means that this argument cannot explain our lack of significant
results. Thus, this unique result with respect to the for-profit literature could be explained by differences between the
reality of the nonprofit sector and that of the for-profit one, as we noted in the Introduction.
This leads us to ask what the absence of significant results indicates. Our initial thought is that boards are not effec-
tively accomplishing either their monitoring or advisory roles. According to the previous literature, board composition
determines their ability to monitor operations and give good advice. However, we cannot claim that this is the only way
to evaluate the influence of boards on the financial vulnerability of organizations because two boards with the same
composition could have different impacts depending on their functioning. In this way, we can only affirm that the influ-
ence of the board on an organization’s level of financial vulnerability does not depend on its structure or composition.
Therefore, NPOs are not benefiting from the expertise or diversity of their directors, which might cause them to recon-
sider whether it is important to choose directors based on their capacities or, in the end, the role of the board in an
organization’s decision-making process. In future research, an analysis of the internal functioning of boards (e.g., how
much time directors devote to their duties, how each director participates in meetings, or other governance variables
16 GARCIA-RODRIGUEZ ET AL .

at the board level) could be conducted to assess how such factors are related to minimizing the financial vulnerability
of NPOs. This research has already been initiated by Hodge and Piccolo (2011) and Zhai, Watson, Gilchrist, and Newby
(2017), and, in fact, they have found that poor functioning of the board is a cause of financial vulnerability in NPOs.
Our findings are also biased because they only refer to a specific subsector of the nonprofit industry in a single
country during a single year. As has been shown in the business sector, the level of complexity and sophistication of
organizations influences the relationship between their boards and financial problems (Darrat et al., 2016). Thus, the
type and relatively small size of sample we use can be considered one of the main limitations of this study, as it makes
it difficult to generalize the findings to other subsectors, countries, or periods of time. The characteristics of this sam-
ple may also be the reason that we find different results regarding board size compared to those obtained by Hodge
and Piccolo (2011) and that the control variables are not statistically significant, as Andrés-Alonso et al. (2015) have
already noted. Our method of selecting the sample of NGDOs, considering only those under the umbrella of the CON-
GDE, can also result in a selection bias because of the requirements of membership in that organization. Consequently,
as a future topic of research, we propose to enlarge our sample to include more organizations, countries, years, and
distinct nonprofit sectors.
Additionally, we must note some limitations regarding the variables and methodology that we use. On the one hand,
regarding the measurement of variables, we could have used different operationalizations or cutoff values of financial
vulnerability that would have led to different classifications of vulnerable NPOs, as well as considering the measure-
ment of the board variables in different years before the organization is classified as financially vulnerable or not vul-
nerable. On the other hand, with respect to the data we have for each director, the level of detail (both quantity and
quality) of the available information greatly differs depending on the public importance of the director. Therefore,
future research could involve using more operationalizations of financial vulnerability and other methods to compile
data about directors, such as questionnaires.
Furthermore, our study could be complemented by conducting an analysis of the executive team using the same
terms (knowledge and experience) to determine the importance of these types of personal characteristics. Finally,
another avenue for further research could be to study the effect that board structure and composition have on other
areas, such as fundraising or improving the reputation of organizations.

ACKNOWLEDGMENTS
We thank the Spanish Ministry of Economy and Competitiveness for funding this research (Project ECO2017- 85356).
The authors gratefully acknowledge the helpful suggestions received from the two anonymous reviewers and the
comments received from the participants at the ARNOVA and ISTR Conferences held in Washington and Stockholm,
respectively.

DATA AVAILABILITY STATEMENT

The data that support the findings of this study are available from the corresponding author upon reasonable request.

ORCID
Inigo Garcia-Rodriguez https://orcid.org/0000-0003-2662-8018
M. Elena Romero-Merino https://orcid.org/0000-0003-0920-4950
Marcos Santamaria-Mariscal https://orcid.org/0000-0002-2564-7017

REFERENCES
Adams, R., Almeida, H., & Ferreira, D. (2009). Understanding the relationship between founder—CEOs and firm performance.
Journal of Empirical Finance, 16, 136–150. https://doi.org/10.1016/j.jempfin.2008.05.002
Adams, R. B., & Ferreira, D. (2009). Women in the boardroom and their impact on governance and performance. Journal of
Financial Economics, 94, 291–309. https://doi.org/10.1016/j.jfineco.2008.10.007
Altman, E. I. (1968). Financial ratios, discriminant analysis and the prediction of corporate bankruptcy. The Journal of Finance,
23, 589–609. https://doi.org/10.1111/j.1540-6261.1968.tb00843.x
GARCIA-RODRIGUEZ ET AL . 17

Andreoni, J., & Payne, A. A. (2011). Is crowding out due entirely to fundraising? Evidence from a panel of charities. Journal of
Public Economics, 95, 334–343. https://doi.org/10.1016/j.jpubeco.2010.11.011
Andrés-Alonso, P., Azofra-Palenzuela, V., & Romero-Merino, M. E. (2009). Determinants of nonprofit board size and compo-
sition: The case of Spanish foundations. Nonprofit and Voluntary Sector Quarterly, 38, 784–809. https://doi.org/10.1177/
0899764008320501
Andrés-Alonso, P., Azofra-Palenzuela, V., & Romero-Merino, M. E. (2010). Beyond the disciplinary role of governance: How
boards add value to Spanish foundations. British Journal of Management, 21, 100–114. https://doi.org/10.1111/j.1467-
8551.2009.00645.x
Andrés-Alonso, P., Garcia-Rodriguez, I., & Romero-Merino, M. E. (2015). The dangers of assessing the financial vulnerability
of nonprofits using traditional measures: The case of the nongovernmental development organizations in the United King-
dom. Nonprofit Management and Leadership, 25, 371–382. https://doi.org/10.1002/nml.21134
Andres-Alonso, P., Garcia-Rodriguez, I., & Romero-Merino, M. E. (2016). Disentangling the financial vulnerability of nonprofits.
Voluntas: International Journal of Voluntary and Nonprofit Organizations, 27, 2539–2560. Retrieved from https://doi.org/10.
1007/s11266-016-9764-6
Andrés-Alonso, P., Martín-Cruz, N., & Romero-Merino, M. E. (2006). The governance of nonprofit organizations: Empirical evi-
dence from nongovernmental development organizations in Spain. Nonprofit and Voluntary Sector Quarterly, 35, 588–604.
https://doi.org/10.1177/0899764006289765
Beaver, W. (1968). Market prices, financial ratios, and prediction of failure. Journal of Accounting Research, 6, 179–192.
https://doi.org/10.2307/2490233
Bowman, W. (2011). Financial capacity and sustainability of ordinary nonprofits. Nonprofit Management and Leadership, 22,
37–51. https://doi.org/10.1002/nml.20039
Brown, W. A. (2005). Exploring the association between board and organizational performance in nonprofit organizations.
Nonprofit Management and Leadership, 15, 317–339. https://doi.org/10.1002/nml.71
Brown, W. A., Hillman, A. J., & Okun, M. A. (2012). Factors that influence monitoring and resource provision among nonprofit
board members. Nonprofit and Voluntary Sector Quarterly, 41, 145–156. https://doi.org/10.1177/0899764011402510
Burde, G., Rosenfeld, A., & Sheaffer, Z. (2017). Prediction of financial vulnerability to funding instability. Nonprofit and Voluntary
Sector Quarterly, 46, 280–304. https://doi.org/10.1177/0899764016655618
Buse, K., Bernstein, R. S., & Bilimoria, D. (2016). The influence of board diversity, board diversity policies and practices, and
board inclusion behaviors on nonprofit governance practices. Journal of Business Ethics, 133, 179–191. https://doi.org/10.
1007/s10551-014-2352-z
Callen, J. L., Klein, A., & Tinkelman, D. (2003). Board composition, committees, and organizational efficiency: The case of non-
profits. Nonprofit and Voluntary Sector Quarterly, 32, 493–520. https://doi.org/10.1177/0899764003257462
Callen, J. L., Klein, A., & Tinkelman, D. (2010). The contextual impact of nonprofit board composition and structure on organi-
zational performance: Agency and resource dependence perspectives. Voluntas: International Journal of Voluntary and Non-
profit Organizations, 21, 101–125. https://doi.org/10.1007/s11266-009-9102-3
Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity, and firm value. Financial Review,
38, 33–53. https://doi.org/10.1111/1540-6288.00034
Chancharat, N., Krishnamurti, C., & Tian, G. (2012). Board structure and survival of new economy IPO firms. Corporate Gover-
nance: An International Review, 20, 144–163. https://doi.org/10.1111/j.1467-8683.2011.00906.x
Coombes, S. M., Morris, M. H., Allen, J. A., & Webb, J. W. (2011). Behavioural orientations of non-profit boards as a factor in
entrepreneurial performance: Does governance matter? Journal of Management Studies, 48, 829–856. https://doi.org/10.
1111/j.1467-6486.2010.00956.x
Coordinadora de ONG para el Desarrollo-España (CONGDE) (2012). Indicadores de transparencia y buen gobierno [Indicators
of transparency and good governance]. Madrid, Spain: Author.
Cornforth, C. (2001). What makes boards effective? An examination of the relationships between board inputs, struc-
tures, processes and effectiveness in non-profit organisations. Corporate Governance: An International Review, 9, 217–227.
https://doi.org/10.1111/1467-8683.00249
Cruz, C., Justo, R., & De Castro, J. O. (2012). Does family employment enhance MSEs performance?: Integrating socioemotional
wealth and family embeddedness perspectives. Journal of Business Venturing, 27, 62–76. https://doi.org/10.1016/j.jbusvent.
2010.07.002
Daily, C. M., & Dalton, D. R. (1994a). Bankruptcy and corporate governance: The impact of board composition and structure.
Academy of Management Journal, 37, 1603–1617. https://doi.org/10.5465/256801
Daily, C. M., & Dalton, D. R. (1994b). Corporate governance and the bankrupt firm: An empirical assessment. Strategic Manage-
ment Journal, 15, 643–654. https://doi.org/10.1002/smj.4250150806
Darrat, A. F., Gray, S., Park, J. C., & Wu, Y. (2016). Corporate governance and bankruptcy risk. Journal of Accounting, Auditing &
Finance, 31, 163–202. https://doi.org/10.1177/0148558X14560898
18 GARCIA-RODRIGUEZ ET AL .

De Maere, J., Jorissen, A., & Uhlaner, L. M. (2014). Board capital and the downward spiral: Antecedents of bankruptcy in a
sample of unlisted firms. Corporate Governance: An International Review, 22, 387–407. https://doi.org/10.1111/corg.12078
Despard, M. R., Nafziger-Mayegun, R. N., Adjabeng, B. K., & Ansong, D. (2017). Does revenue diversification predict financial
vulnerability among non-governmental organizations in sub-Saharan Africa? Voluntas: International Journal of Voluntary and
Nonprofit Organizations, 28, 2124–2144. https://doi.org/10.1007/s11266-017-9835-3
Dowell, G. W., Shackell, M. B., & Stuart, N. V. (2011). Boards, CEOs, and surviving a financial crisis: Evidence from the internet
shakeout. Strategic Management Journal, 32, 1025–1045. https://doi.org/10.1002/smj.923
Elmagrhi, M. H., Ntim, C. G., Malagila, J., Fosu, S., & Tunyi, A. A. (2018). Trustee board diversity, governance mechanisms, capital
structure and performance in UK charities. Corporate Governance: The International Journal of Business in Society, 18, 478–
508. https://doi.org/10.1108/CG-08-2017-0185
Fredette, C., & Bradshaw, P. (2012). Social capital and nonprofit governance effectiveness. Nonprofit Management and Leader-
ship, 22, 391–409. https://doi.org/10.1002/nml.21037
Gales, L. M., & Kesner, I. F. (1994). An analysis of board of director size and composition in bankrupt organizations. Journal of
Business Research, 30, 271–282. https://doi.org/10.1016/0148-2963(94)90057-4
Garcia-Rodriguez, I., & Jegers, M. (2017). Capital structure of nongovernmental development organizations: First cross-
country evidence. Nonprofit Management and Leadership, 28, 175–194. https://doi.org/10.1002/nml.21275
Garcia-Rodriguez, I., & Romero-Merino, N. E. (2018). Inertias of funding in the development cooperation sector. REVESCO.
Revista de Estudios Cooperativos, 128, 127–148. https://doi.org/10.5209/REVE.60206
Gordon, T. P., Fischer, M., Greenlee, J., & Keating, E. K. (2013). Warning signs: Nonprofit insolvency indicators. International
Research Journal of Applied Finance, 4, 343–378.
Greenlee, J. S., & Trussel, J. M. (2000). Predicting the financial vulnerability of charitable organizations. Nonprofit Management
and Leadership, 11, 199–210. https://doi.org/10.1002/nml.11205
Hager, M. A. (2001). Financial vulnerability among arts organizations: A test of the Tuckman-Chang measures. Nonprofit and
Voluntary Sector Quarterly, 30, 376–392. https://doi.org/10.1177/0899764001302010
Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Man-
agement Review, 9, 193–206. https://doi.org/10.2307/258434
Harris, E. E. (2014). The impact of board diversity and expertise on nonprofit performance. Nonprofit Management and Leader-
ship, 25, 113–130. https://doi.org/10.1002/nml.21115
Haynes, K. T., & Hillman, A. (2010). The effect of board capital and CEO power on strategic change. Strategic Management Jour-
nal, 31, 1145–1163. https://doi.org/10.1002/smj.859
He, L. (2008). Do founders matter? A study of executive compensation, governance structure and firm performance. Journal of
Business Venturing, 23, 257–279. https://doi.org/10.1016/j.jbusvent.2007.02.001
Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence
perspectives. Academy of Management Review, 28, 383–396. https://doi.org/10.5465/amr.2003.10196729
Hodge, M. M., & Piccolo, R. F. (2005). Funding source, board involvement techniques, and financial vulnerability in nonprofit
organizations: A test of resource dependence. Nonprofit Management and Leadership, 16, 171–190. https://doi.org/10.1002/
nml.99
Hodge, M. M., & Piccolo, R. F. (2011). Nonprofit board effectiveness, private philanthropy, and financial vulnerability. Public
Administration Quarterly, 35, 520–550. https://doi.org/10.2307/23209327
Hyndman, N., & McDonnell, P. (2009). Governance and charities: An exploration of key themes and the development of a
research agenda. Financial Accountability & Management, 25, 5–31. https://doi.org/10.1111/j.1468-0408.2008.00463.x
Jegers, M. (2008). Managerial Economics of Non-Profit Organizations. London: Routledge.
Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. Journal of Finance, 48,
831–880. https://doi.org/10.1111/j.1540-6261.1993.tb04022.x
Jizi, M. I., & Nehme, R. (2017). Board gender diversity and firms’ equity risk. Equality, Diversity and Inclusion: An International
Journal, 36, 590–606. https://doi.org/10.1108/EDI-02-2017-0044
Keating, E. K., Fischer, M., Gordon, T. P., & Greenlee, J. S. (2005). Assessing financial vulnerability in the nonprofit sector. KSG
Faculty Research Working Paper Series RWP05-002.
Kingma, B. R. (1993). Portfolio theory and nonprofit financial stability. Nonprofit and Voluntary Sector Quarterly, 22, 105–119.
https://doi.org/10.1177/089976409302200202
Krause, R., Semadeni, M., & Cannella, A. A., Jr. (2014). CEO duality: A review and research agenda. Journal of Management, 40,
256–286. https://doi.org/10.1177/0149206313503013
Lajili, K., & Zéghal, D. (2010). Corporate governance and bankruptcy filing decisions. Journal of General Management, 35, 3–26.
https://doi.org/10.1177/030630701003500401
Lee, T. S., & Yeh, Y. H. (2004). Corporate governance and financial distress: Evidence from Taiwan. Corporate governance: An
International Review, 12, 378–388. https://doi.org/10.1111/j.1467-8683.2004.00379.x
GARCIA-RODRIGUEZ ET AL . 19

Miller-Millesen, J. L. (2003). Understanding the behavior of nonprofit boards of directors: A theory-based approach. Nonprofit
and Voluntary Sector Quarterly, 32, 521–547. https://doi.org/10.1177/0899764003257463
Mintzberg, H. (1983). Power in and around organizations. Englewood Cliffs, NJ: Prentice-Hall.
Oehmichen, J., Schrapp, S., & Wolff, M. (2017). Who needs experts most? Board industry expertise and strategic change—a
contingency perspective. Strategic Management Journal, 38, 645–656. https://doi.org/10.1002/smj.2513
O’Regan, K., & Oster, S. (2002). Does government funding alter nonprofit governance? Evidence from New York City nonprofit
contractors. Journal of Public Policy Analysis and Management, 21, 359–379. https://doi.org/10.1002/pam.10050
O’Regan, K., & Oster, S. M. (2005). Does the structure and composition of the board matter? The case of nonprofit organiza-
tions. Journal of Law, Economics, and Organization, 21, 205–227. https://doi.org/10.1093/jleo/ewi009
Oyotode-Adebile, R. M., & Raja, Z. A. (2019). Board gender diversity and US corporate bonds. International Journal of Managerial
Finance, 15, 771–791. https://doi.org/10.1108/IJMF-10-2018-0290
Platt, H., & Platt, M. (2012). Corporate board attributes and bankruptcy. Journal of Business Research, 65, 1139–1143.
https://doi.org/10.1016/j.jbusres.2011.08.003
Poletti-Hughes, J., & Briano-Turrent, G. C. (2019). Gender diversity on the board of directors and corporate risk: A behavioural
agency theory perspective. International Review of Financial Analysis, 62, 80–90. https://doi.org/10.1016/j.irfa.2019.02.004
Prentice, C. R. (2016a). Understanding nonprofit financial health: Exploring the effects of organizational and environmental
variables. Nonprofit and Voluntary Sector Quarterly, 45, 888–909. https://doi.org/10.1177/0899764015601243
Prentice, C. R. (2016b). Why so many measures of nonprofit financial performance? Analyzing and improving the use of
financial measures in nonprofit research. Nonprofit and Voluntary Sector Quarterly, 45, 715–740. https://doi.org/10.1177/
0899764015595722
Reguera-Alvarado, N., de Fuentes, P., & Laffarga, J. (2017). Does board gender diversity influence financial performance? Evi-
dence from Spain. Journal of Business Ethics, 141, 337–350. from https://doi.org/10.1007/s10551-015-2735-9
Ritchie, W. J., & Eastwood, K. (2006). Executive functional experience and its relationship to the financial performance of non-
profit organizations. Nonprofit Management and Leadership, 17, 67–82. https://doi.org/10.1002/nml.131
Romero-Merino, M. E., & Garcia-Rodriguez, I. (2016). Good governance in philanthropy and nonprofits. In J. Harrow, T. Jung, &
S. Philips (Eds.), The Routledge companion to philanthropy (pp. 415–427). London, UK: Routledge.
Simpson, W. G., & Gleason, A. E. (1999). Board structure, ownership, and financial distress in banking firms. International Review
of Economics & Finance, 8, 281–292. https://doi.org/10.1016/S1059-0560(99)00026-X
Terjesen, S., Sealy, R., & Singh, V. (2009). Women directors on corporate boards: A review and research agenda. Corporate
Governance: An International Review, 17, 320–337. https://doi.org/10.1111/j.1467-8683.2009.00742.x
Tevel, E., Katz, H., & Brock, D. M. (2015). Nonprofit financial vulnerability: Testing competing models, recommended
improvements, and implications. Voluntas: International Journal of Voluntary and Nonprofit Organizations, 26, 2500–2516.
https://doi.org/10.1007/s11266-014-9523-5
Trussel, J. M. (2002). Revisiting the prediction of financial vulnerability. Nonprofit Management and Leadership, 13, 17–31.
https://doi.org/10.1002/nml.13103
Tuckman, H. P., & Chang, C. F. (1991). A methodology for measuring the financial vulnerability of charitable nonprofit organi-
zations. Nonprofit and Voluntary Sector Quarterly, 20, 445–460. https://doi.org/10.1177/089976409102000407
Van Puyvelde, S., Caers, R., Du Bois, C., & Jegers, M. (2012). The governance of nonprofit organizations: Integrating agency
theory with stakeholder and stewardship theories. Nonprofit and Voluntary Sector Quarterly, 41, 431–451. https://doi.org/
10.1177/0899764011409757
Wally, S., & Baum, J. R. (1994). Personal and structural determinants of the pace of strategic decision making. Academy of Man-
agement journal, 37, 932–956. https://doi.org/10.5465/256605
Yan, W., Denison, D. V., & Butler, J. S. (2009). Revenue structure and nonprofit borrowing. Public Finance Review, 37, 47–67.
Retrieved from https://doi.org/10.1177/1091142108321239
Westphal, J. D., & Milton, L. P. (2000). How experience and network ties affect the influence of demographic minorities on
corporate boards. Administrative Science Quarterly, 45, 366–398. https://doi.org/10.2307/2667075
Zhai, R. L., Watson, J., Gilchrist, D., & Newby, R. (2017). Non-profit vulnerability: An exploratory study. Financial Accountability
& Management, 33, 373–390. https://doi.org/10.1111/faam.12129

How to cite this article: Garcia-Rodriguez I, Romero-Merino ME, Santamaria-Mariscal M. The role of boards
in the financial vulnerability of nonprofit organizations. Financial Acc & Man. 2020;1–25.
https://doi.org/10.1111/faam.12269
 20

Appendix

TA B L E A . 1 Estimations of logit analysis. Dependent variable: VARNA

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
LBOARDSIZE −3.692
(4.718)
LBOARDSIZE_SQ 0.965
(0.968)
INSIDER 1.320
(3.458)
DUALITY −0.948
(1.095)
FOUNDER −2.266
(2.586)
BLAU −0.734
(2.139)
EXEC_COMP 1.824
(1.500)
EXEC_NPO 2.072
(2.953)
BOARD_COMP 1.145
(1.612)
BOARD_NPO −1.768
(1.680)
BANKING 3.944
(2.543)
(Continues)
GARCIA-RODRIGUEZ ET AL .
TA B L E A . 1 (Continued)

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
COOP 1.395
(1.860)
GARCIA-RODRIGUEZ ET AL .

ECO 2.347
(1.828)
NPOSTUDY 2.180
(3.411)
EDUCGRADE −0.489
(0.965)
LNGDOSIZE −0.387* −0.222 −0.232 −0.227 −0.236 −0.293 −0.215 −0.326 −0.294
(0.216) (0.187) (0.187) (0.184) (0.185) (0.196) (0.196) (0.205) (0.200)
LAGE −0.732 −0.275 −0.283 −0.513 −0.222 −0.151 −0.449 −0.246 −0.089
(0.781) (0.694) (0.695) (0.773) (0.711) (0.744) (0.744) (0.755) (0.745)
MARGIN 0.509 0.968 1.026 0.653 1.037 0.675 1.394 1.030 1.572
(1.725) (1.625) (1.614) (1.736) (1.619) (1.685) (1.750) (1.740) (1.704)
REVCON 1.664 1.823 1.968 2.291 1.805 1.133 2.239 1.128 1.019
(1.772) (1.656) (1.661) (1.745) (1.650) (1.788) (1.848) (1.847) (1.921)
PUBLIC 1.887* 1.665* 1.781* 1.789* 1.746* 1.824* 1.924* 2.013* 1.811*
(1.101) (1.032) (1.048) (1.038) (1.035) (1.500) (1.050) (1.113) (1.092)
Constant 9.741 2.583 2.779 3.371 2.951 2.998 3.134 3.758 3.490
(8.079) (3.343) (3.361) (3.450) (3.336) (3.566) (3.450) (3.645) (3.697)
Cox & Snell R2 0.205 0.157 0.166 0.166 0.157 0.190 0.174 0.208 0.188
Nagelkerke R2 0.274 0.210 0.222 0.221 0.209 0.253 0.233 0.278 0.251
Percentage of 70.7% 65.5% 65.5% 67.2% 65.5% 63.8% 62.1% 70.7% 67.2%
global correct
predictions
*, **, ***
: Significant coefficient with a level of confidence of 90%, 95%, and 99% respectively.
21
 22

TA B L E A . 2 Estimations of logit analysis. Dependent variable: TATD

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
LBOARDSIZE 6.061
(4.083)
LBOARDSIZE_SQ −1.131
(0.808)
INSIDER −1.658
(3.217)
DUALITY −1.115
(1.160)
FOUNDER −1.888
(2.528)
BLAU −3.463
(2.214)
EXEC_COMP −0.470
(1.354)
EXEC_NPO −0.018
(2.617)
BOARD_COMP −0.849
(1.633)
BOARD_NPO −0.181
(1.483)
BANKING −1.455
(2.278)
(Continues)
GARCIA-RODRIGUEZ ET AL .
TA B L E A . 2 (Continued)

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE)
COOP 0.080
(1.622)
GARCIA-RODRIGUEZ ET AL .

ECO −1.301
(1.654)
NPOSTUDY −0.683
(3.134)
EDUCGRADE 0.539
(0.883)
LNGDOSIZE 0.126 0.066 0.095 0.091 0.071 0.102 0.127 0.121 0.111
(0.195) (0.182) (0.180) (0.181) (0.191) (0.188) (0.196) (0.190) (0.190)
LAGE −0.416 −0.470 −0.488 −0.652 −0.219 −0.515 −0.548 −0.506 −0.569
(0.692) (0.6342) (0.645) (0.688) (0.677) (0.675) (0.666) (0.653) (0.694)
MARGIN 0.470 0.358 0.278 0.025 0.392 0.365 0.331 0.316 0.038
(1.592) (1.459) (1.447) (1.528) (1.493) (1.472) (1.470) (1.445) (1.494)
REVCON −1.167 −1.418 −1.346 −1.140 −1.858 −1.334 −1.153 −1.244 −1.101
(1.635) (1.629) (1.627) (1.672) (1.776) (1.699) (1.762) (1.698) (1.780)
PUBLIC 0.643 0.515 0.469 0.511 0.705 0.431 0.422 0.387 0.468
(0.975) (0.988) (0.980) (0.979) (1.067) (0.988) (0.991) (1.003) (1.006)
Constant −8.458 0.655 0.233 0.758 1.072 0.219 −0.056 −0.073 −0.329
(6.814) (3.105) (3.086) (3.139) (3.209) (3.264) (3.170) (3.222) (3.471)
Cox and Snell R2 0.092 0.053 0.067 0.059 0.091 0.051 0.055 0.056 0.063
Nagelkerke R2 0.124 0.072 0.099 0.079 0.123 0.069 0.074 0.075 0.085
Percentage of 60.3% 58.6% 62.1% 60.3% 63.8% 65.5% 63.8% 65.5% 62.1%
global correct
predictions
*, **, ***
: Significant coefficient with a level of confidence of 90%, 95%, and 99%, respectively.
23
 24

TA B L E A . 3 Estimations of logit analysis. Dependent variable: CASD

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (S. E.)
LBOARDSIZE 4.506
(3.910)
LBOARDSIZE_SQ −0.826
(0.770)
INSIDER −0.931
(3.140)
DUALITY −1.041
(1.166)
FOUNDER −1.294
(2.422)
BLAU −1.685
(2.074)
EXEC_COMP −0.985
(1.394)
EXEC_NPO −0.302
(2.603)
BOARD_COMP −0.792
(1.620)
BOARD_NPO −0.123
(1.474)
BANKING −1.266
(2.252)
(Continues)
GARCIA-RODRIGUEZ ET AL .
TA B L E A . 3 (Continued)

(1)Coefficient (2)Coefficient (3)Coefficient (4)Coefficient (5)Coefficient (6)Coefficient (7)Coefficient (8)Coefficient (9)Coefficient

Variable (SE) (SE) (SE) (SE) (SE) (SE) (SE) (SE) (S. E.)
COOP −0.253
(1.642)
GARCIA-RODRIGUEZ ET AL .

ECO −1.591
(1.709)
NPOSTUDY −2.580
(3.231)
EDUCGRADE 0.516
(0.860)
LNGDOSIZE −0.044 −0.076 −0.056 −0.063 −0.079 −0.028 −0.030 −0.038 −0.036
(0.191) (0.182) (0.180) (0.180) (0.185) (0.187) (0.194) (0.190) (0.193)
LAGE −0.232 −0.251 −0.271 −0.382 −0.109 −0.345 −0.307 −0.281 −0.474
(0.682) (0.646) (0.647) (0.697) (0.675) (0.6780) (0.662) (0.653) (0.712)
MARGIN 0.292 0.254 0.201 0.016 0.279 0.374 0.252 0.242 −0.280
(1.572) (1.468) (1.453) (1.540) (1.483) (1.478) (1.470) (1.445) (1.524)
REVCON −1.211 −1.466 −1.373 −1.241 −1.718 −1.131 −1.206 −1.310 −1.028
(1.666) (1.674) (1.667) (1.727) (1.750) (1.745) (1.808) (1.737) (1.831)
PUBLIC 1.012 0.936 0.914 0.939 1.040 0.828 0.854 0.845 0.956
(0.996) (1.022) (1.012) (1.012) (1.069) (1.019) (1.023) (1.034) (1.049)
Constant −4.778 1.828 1.564 1.967 2.042 1.428 1.280 1.395 1.452
(6.556) (3.138) (3.110) (3.168) (3.157) (3.275) (3.186) (3.239) (3.462)
Cox and Snell R2 0.058 0.033 0.047 0.036 0.043 0.041 0.036 0.038 0.062
Nagelkerke R2 0.079 0.045 0.063 0.049 0.058 0.056 0.048 0.051 0.084
Percentage of 56.9% 62.1% 58.6% 56.9% 56.9% 62.1% 60.3% 63.8% 60.3%
global correct
predictions
*, **, ***
: Significant coefficient with a level of confidence of 90%, 95%, and 99% respectively.
25