A popular theory for why firms take nonprofit status is that it is a signal of quality. This paper offers a simple, empirical test of this theory. If nonprofit status signals quality, surely nonprofit firms would want to ensure that consumers are aware of this. A natural way for firms to do this...

Why do firms take non-profit status? One of the most popular theories in the law and economics literature is that non-profit status is a signal of quality (Hansmann 1980; Glaeser & Shleifer 2001). This paper offers a simple, empirical test of this theory. If non-profit status signals quality, surely...