| This study built on a foundation in the corporate-finance, healthcare, nonprofit, and legal literatures to develop a theory of not-for-profit governance in conversion situations. The central claim of that theory was that not-for-profit governance systems were less robust than their for-profit counterparts.;It used the question of pricing in healthcare conversions to test that theory. In doing so, the study extended the literature in three practical ways. First, it added an enhancement to the event-study methodology to compensate for the impact of serial-acquisitions on abnormal-return calculations. Second, it was the first study to move beyond the question of fair-market pricing to consider the implications of transaction- and control-structure on pricing. Finally, it used multiple indicators to investigate the effectiveness of not-for-profit governance structures longitudinally.;The study offers evidence to support the hypothesis that publicly-owned buyers underpaid in aggregate for not-for-profit hospitals. But this is only one of three possible explanations that are consistent with the data. The study also found indications that buyers may have used complex structures to enhance their returns from conversions. But the data did not support that contention conclusively. It also found indications that governments have done a better job securing fair-market pricing than either community hospitals or those controlled by residual beneficiaries. However, that finding was not as robust for community hospitals as it was when transactions involving governments were compared to those done by residual beneficiaries. Finally, a confluence of evidence suggested that not-for-profit oversight has not been effective in protecting the public's financial interests in its assets.;This evidence provides preliminary, but not conclusive, support for the central claim of this dissertation. It suggests that insiders had both motive, in the form of potential personal benefits, and opportunity, in the form of a less than robust not-for-profit governance system, to deprive the public of fair compensation for their charitable-hospital assets. However, additional work must be done before such a claim can be supported unequivocally. |
