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Do donors discount accounting information of nonprofits affiliated with for-profit firms?

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  • Meeok Cho
  • Wonsuk Ha
  • Yewon Kim
  • Eugenia Lee
  • Woo-Jong Lee

Abstract

Recent anecdotes suggest that shareholdings of for-profit firms by nonprofit organizations engender agency conflicts between donors and managers. Analyzing a unique dataset of nonprofits in Korea, we find evidence that donors of the share-affiliated nonprofits rely less on the program ratio, a primary accounting performance metric in nonprofits, in making subsequent donations than those in unaffiliated nonprofits. We also report that the affiliation effect is primarily driven by individual donors but effectively attenuated by government monitoring. Our results highlight a novel source of agency problems in nonprofits.

Suggested Citation

  • Meeok Cho & Wonsuk Ha & Yewon Kim & Eugenia Lee & Woo-Jong Lee, 2023. "Do donors discount accounting information of nonprofits affiliated with for-profit firms?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 30(2), pages 490-513, March.
    • Handle: RePEc:taf:raaexx:v:30:y:2023:i:2:p:490-513
    DOI: 10.1080/16081625.2020.1828107
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