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UID:20260709T073658EDT-9949fTcIog@132.216.98.100
DTSTAMP:20260709T113658Z
DESCRIPTION:Brian Cadman\n\nUniversity of Utah\, David Eccles School of Bus
 iness\n\nThe Consequences of Restricting the Distribution of Earnings for 
 Tax-Exempt Organizations\n\nFriday\, May 26\, 2023\n	11:15 AM – 12:45 PM\n	B
 ronfman 340\n\nAbstract:\n\nOrganizing as a tax-exempt business amplifies 
 agency problems through limited own- ership and restricted earnings distri
 bution. We study the consequences of this orga- nizational structure in th
 e setting of private tax-exempt hospitals\, which own 75% of total industr
 y assets\, holds 75% of total cash on their balance sheets\, care for 70% 
 of total patient-stays\, and employ 70% of total industry employees. These
  tax-exempt hospitals earn net income of $9 million\, on average\, and hol
 d an average cash balance of $28 million. Using a re-weighted\, multivaria
 te regression\, we find that tax-exempt hos- pitals distribute economic pr
 ofits to employee-stakeholders through 42% larger salary expenses and also
  invest more in fixed assets through capital expenditures that are 88% lar
 ger than taxable hospitals. In addition\, we show that tax-exempt hospital
 s hold four times more cash and 40% more net assets than taxable hospitals
 . As further evidence of the tax-exempt status trapping cash in the firm\,
  we show that tax-exempt hospitals sharply reduce their cash balances imme
 diately upon converting to taxable status. Taken together\, the evidence h
 ighlights that restrictions on earnings distribu- tions traps cash and equ
 ity within the firm\, inducing potentially perverse behavior for those tax
 -exempt organizations that are profitable.\n\nFor more information\, conta
 ct linda.foster [at] mcgill.ca (subject: Ernst%20%26%20Young%20Speaker%20S
 eries%20with%20Brian%20Cadman)  (Linda Foster)\n
DTSTART:20090526T151500Z
DTEND:20090526T164500Z
SUMMARY:Accounting Area Presents: Ernst & Young Speaker Series
URL:/desautels/channels/event/accounting-area-presents
 -ernst-young-speaker-series-348431
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