TY - JOUR
T1 - Earnings Management by Non-profit Organisations
T2 - Evidence from UK Charities
AU - Nguyen, Tam
AU - Soobaroyen, Teerooven
PY - 2019/3
Y1 - 2019/3
N2 - Informed by stakeholder theory and resource dependence theory, this paper investigates whether UK charities are engaged in earnings management practices. Based on a sample of 1414 charities over a five-year period (2008–2012) the study firstly finds that UK charities use discretionary accruals to drive their financial results towards a zero surplus/deficit; this result also reveals that the distribution of reported earnings around zero is prevalent amongst UK charities. In addition, in contrast to prior findings, the empirical results point to a significant association between leverage and earnings management behaviour by charities. Lastly, this study finds that the practice of earnings management is influenced by non-profit organisational size.
AB - Informed by stakeholder theory and resource dependence theory, this paper investigates whether UK charities are engaged in earnings management practices. Based on a sample of 1414 charities over a five-year period (2008–2012) the study firstly finds that UK charities use discretionary accruals to drive their financial results towards a zero surplus/deficit; this result also reveals that the distribution of reported earnings around zero is prevalent amongst UK charities. In addition, in contrast to prior findings, the empirical results point to a significant association between leverage and earnings management behaviour by charities. Lastly, this study finds that the practice of earnings management is influenced by non-profit organisational size.
UR - http://www.scopus.com/inward/record.url?scp=85063197564&partnerID=8YFLogxK
UR - https://onlinelibrary.wiley.com/doi/10.1111/auar.12242
U2 - 10.1111/auar.12242
DO - 10.1111/auar.12242
M3 - Article
AN - SCOPUS:85063197564
SN - 1035-6908
VL - 29
SP - 124
EP - 142
JO - Australian Accounting Review
JF - Australian Accounting Review
IS - 1
ER -