ISSN 2360-7998
Abstract Financial vulnerability in the not-for-profit (NFP) sector has received little research attention compared to the broad literature in the for-profit sector. Hence, the purpose of the study is to examine the impact of board characteristics on the extent of NFP financial vulnerability (FV) in the Australian aged care sector. More specifically, the study attempts to contribute to the existing literature by addressing the following research question: What is the effect of board characteristics on the extent of financial vulnerability? Panel regression results indicate the extent of FV in the Australian aged care NFP sector is influenced by board independence, board gender diversity, board members’ finances, and aged care-related competence, and the size of the NFP. The study contributes to resource dependency theory (RDT) literature of NFPs by identifying that independent directors bring more resources to an organisation due to their professional experience, expertise, competence, and relationships with other organisations in the external environment, which reduces resource dependency and the level of FV in the NFP sector. The policymakers can consider these factors for framing policies related to board composition in the NFP sector to improve financial health in the Australian aged care NFP sector.
Keywords: Not-for-profit organisations, Australian aged care sector, financial vulnerability, corporate governance, quantitative methods