Abstract
In recent years, the governance of Japanese nonprofit organizations, especially public interest corporations which are Japan’s leading nonprofits, have been attracting attention. This study focuses on the members / councilors from the perspective of nonprofit governance and investigates empirically its role from the perspective of its relevance to performance. This study is based on the theory and evidence of Aggarwal et al. (2012), who conducted an empirical analysis of the board of directors as the highest decision-making body in the US nonprofit organization. Japanese public interest corporations have members / council that has a role similar to that of the board of directors in a US nonprofit organization, and is expected to have the same effect on the performance of public interest corporations as the board of directors in the United States. As a result of using 25,370 public interest corporation data from 2013 to 2017, the size of members / councils of the public interest corporation had a positive relationship with their performance. On the other hand, given the size of the members / councilors, the size of the board of directors was not related to the performance of public interest corporations. This paper provides insights to the owners and regulators of non-profit organizations, by presenting evidence that the members / councilors can be an effective monitoring mechanism in an environment where major monitoring entities such as donors are lacking.
