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Earnings management by non-profit organisations: evidence from UK charities

Nguyen, Tam; Soobaroyen, Teerooven

Authors

TAM NGUYEN TAM.NGUYEN@NOTTINGHAM.AC.UK
Assistant Professor in Accounting

Teerooven Soobaroyen



Abstract

Informed by stakeholder theory and resource dependence theory, this paper investigates whether United Kingdom (UK) charities are engaged in earnings management practices. Based on a sample of 1414 charities over a five-year period (2008–2012) this study firstly finds that UK charities use discretionary accruals to drive their financial results toward 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 also finds that the practice of earnings management is influenced by non-profit organizational size.

Journal Article Type Article
Publication Date 2019-03
Journal Australian Accounting Review
Print ISSN 1035-6908
Electronic ISSN 1835-2561
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 29
Issue 1
Pages 124-142
APA6 Citation Nguyen, T., & Soobaroyen, T. (2019). Earnings management by non-profit organisations: evidence from UK charities. Australian Accounting Review, 29(1), 124-142. doi:10.1111/auar.12242
DOI https://doi.org/10.1111/auar.12242
Keywords earnings management; non-profit organisations; charities; leverage; stakeholder theory; resource dependence theory
Publisher URL https://onlinelibrary.wiley.com/doi/abs/10.1111/auar.12242
Copyright Statement Copyright information regarding this work can be found at the following address: http://eprints.nottingh.../end_user_agreement.pdf
Additional Information This is the peer reviewed version of the following article, which has been published in final form at https://onlinelibrary.w...abs/10.1111/auar.12242. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://eprints.nottingham.ac.uk/end_user_agreement.pdf





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