Earnings Management in Nonprofit Organizations: Does Governmental Financing Play a Role?
AbstractA vast amount of research has documented the existence of earnings management in for-profit settings. Nonprofit organizations are thought to pay less attention to the bottom line of the income statement. Earnings management research in nonprofit settings has therefore focused on the manipulation of expenses in order to improve efficiency ratios or taxable income, not reported earnings per se. Given a setting in which such ratios are not reported to the public, manipulation of the actual bottom line by nonprofit organizations is explored in light of the importance of governmental subsidies. The results suggest that nonprofit organizations drive their results towards the breakeven point and that manipulation seems to be intensified by increased governmental funding.
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Bibliographic InfoPaper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 10/665.
Length: 40 pages
Date of creation: Aug 2010
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-23 (All new papers)
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