Brian D. Galle, Georgetown Law, has made available for download his paper, “Corporate Compliance without Enforcement?: Private Foundations and the Uniform Prudent Management of Institutional Funds Act.” The abstract is as follows,
I examine the determinants of nonprofit corporate compliance with law using a large panel of over one million firm-years. Despite the almost total absence of any credible enforcement threat, I find widespread compliance. I exploit rolling state adoption of the Uniform Prudent Management of Institutional Funds Acts, which lifted some existing limits on firm spending, but which applied to some but not all firms within each state. This allows the use of triple-difference estimates that control for changes in local norms and economic conditions. Interacting the triple-difference factors with other predictors of compliance, I find no correlation between compliance and enforcement intensity, but some evidence that compliance is correlated with firm culture and reliance on accountants. I argue that my findings are among the first to discover compliance in the absence of a meaningful formal deterrence mechanism. Further, my findings have important implications for the governance of charitable organizations.
Posted by Allison Trupp, Associate Editor, Wealth Strategies Journal