Earnings Management by Non-profit Organisations: Evidence from UK Charities

Tam Nguyen*, Teerooven Soobaroyen

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


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.

Original languageEnglish
Pages (from-to)124-142
Number of pages19
JournalAustralian Accounting Review
Issue number1
Early online date26 Jun 2018
Publication statusPublished - Mar 2019


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