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.

Due to the significant role of non-profit organizations in the development of modern societies, these organizations must adjust their boardrooms. Since traditional theories of corporate governance appear to be limited in explaining the changing non-profit world, we propose an extended model of governance that integrates the traditional arguments of agency theory with a cognitive dimension. Based on a sample of Spanish foundations, we present evidence on the effect of the board composition on foundations' organizational efficiency. We show that board size and independence do not have a definitive effect on the entity's efficiency. Instead, the knowledge diversity inside the boardroom and the active character of trustees have a positive influence on resource allocation. The cognitive dimension of the extended model of governance is critical to explaining how boards impact on organizational performance.

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. WE THANK THE SPANISH MINISTRY OF ECONOMY AND COMPETITIVENESSfor funding this research (Project ECO2012-32554). We appreciate the helpful comments of former editor Duncan V. Neuhauser, two anonymous reviewers, and participants at the XXIV National Congress of ACEDE and the XV Congress of CIRIEC-Spain.Corporate fi nancial diagnosis has been exhaustively studied, especially since the work of Altman (1968). Academicians have repeatedly attempted to fi nd suitable models to predict, fi rst, corporate bankruptcy (Altman 1968; Ohlson 1980) and, afterward, fi nancial distress ( Frydman, Altman, and Kao 1985;Zmijewski 1984). However, fi nancial vulnerability of nonprofi t organizations has been ignored by the academic literature until the '90s. Since then, the great economic growth of this sector and, most important, the several fl uctuations of the global economy have led to the need to take into account this topic in the nonprofi t sector also. Because of the lack of data on nonprofi t bankruptcies, the fi rst challenge was to defi ne when a nonprofi t is considered fi nancially vulnerable.In 1991, Tuckman and Chang elaborated a model to evaluate nonprofi ts' fi nancial problems. After them, authors such as Trussel and Greenlee have tried to develop predictive models to detect in advance potential fi nancial problems without reaching conclusive results (Greenlee

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.

Recently, many empirical studies have examined the determinants of corporate boards of directors. Using an agency theory framework, the authors explain how nonprofit boards are structured. Although nonprofits cannot disburse profits to their contributors, the role played by their boards of trustees in monitoring and advising managers is analogous to that of corporate boards of directors. Using a sample of Spanish foundations, the authors show that nonprofit board determinants, such as organizational complexity and financing structure, are similar in many ways to those of corporate boards. However, nonprofit age illustrates the different natures of these organizations and their voluntary boards.