Analyzing Disclosure Practice of Religious Nonprofit Organizations using Partial Disclosure Index
This study examines the relevance of disclosure
practices in improving the accountability and transparency of
religious nonprofit organizations (RNPOs). The assessment of
disclosure is based on the annual returns of RNPOs for the financial
year 2010. In order to quantify the information disclosed in the
annual returns, partial disclosure indexes of basic information (BI)
disclosure index, financial information (FI) disclosure index and
governance information (GI) disclosure index have been built which
takes into account the content of information items in the annual
returns. The empirical evidence obtained revealed low disclosure
practices among RNPOs in the sample. The multiple regression
results showed that the organizational attribute of the board size
appeared to be the most significant predictor for both partial index on
the extent of BI disclosure index, and FI disclosure index. On the
other hand, the extent of financial information disclosure is related to
the amount of donation received by RNPOs. On GI disclosure index,
the existence of an external audit appeared to be significant variable.
This study has contributed to the academic literature in providing
empirical evidence of the disclosure practices among RNPOs.
[1] J. Jetty and V. Beattie, "RR108 - Disclosure practices and policies of UK
Charities," ACCA2009.
[2] N. Hyndman, "Charity accounting: An empirical study of the
information needs of contributors to UK fundraising charities,"
Financial Accountability & Management, vol. 6, pp. 295-307, 1990.
[3] N. Hyndman, "Contributors to charities - A comparison of their
information needs and the perceptions of such by the providers of
information," Financial Accountability & Management, vol. 7, pp. 69-
82, 1991.
[4] L. M. Parsons, "The impact of financial information and voluntary
disclosure on contributions to not-for-profit organizations," Behavioral
Research in Accounting, vol. 19, pp. 179-196, 2007.
[5] T. Gordon, M. Fisher, D. Malone, and G. Tower, "A comparative
empirical examination of extent of disclosure by private and public
colleges and universities in the United States," Journal of Accounting
and Public Policy, vol. 21, pp. 235-275, 2002.
[6] M. Fischer, T. P. Gordon, and M. A. Kraut, "Meeting user information
needs: The impact of major changes in FASB and GASB standards on
financial reporting by colleges and universities," in Journal of
Accounting and Public Policy vol. 29, ed, 2010, pp. 374-399.
[7] W. Banks and M. Nelson, "Financial disclosure by Ontario universities:
1988-1993," Journal of International Accounting, Auditing & Taxation,
vol. 3, pp. 287-305, 1994.
[8] A. Roshayani, O. Normah, A. R. Rashidah, S. Jamaliah, and M. Intan
Salwani, "Governance and financial reporting: An exploratory study of
disclosure practices by nonprofit organizations in Malaysia," in
Accounting Research and Education (AREC) Universiti Teknologi
MARA, Shah Alam, 2012.
[9] J. L. Gandia, "Internet disclosure by nonprofit organizations: Empirical
evidence of nongovernmental organizations for development in Spain,"
Nonprofit and Voluntary Sector Quarterly, vol. 40, pp. 57-78, 2011.
[10] P. M. Healy and K. G. Palepu, "Information asymmetry, corporate
disclosure and the capital markets: A review of the empirical disclosure
literature," Journal of Accounting and Economics, vol. 31, pp. 405-440,
2001.
[11] O. Kim and R. E. Verrecchia, "Market liquidity and volume around
earnings announcements," Journal of Accounting and Economics, vol.
17, pp. 41-68, 1994.
[12] J. Zhuang, G. D. Saxton, and H. Wu, "Publicity vs. impact in nonprofit
disclosures and donor preferences: A sequential game with one nonprofit
organization and N donors," Annals of Operations Research, Published
on-line: 21 September 2011.
[13] S. Buchheit and L. M. Parsons, "An experimental investigation of
accounting information's influence on the individual giving process,"
Journal of Accounting and Public Policy, vol. 25, pp. 666-686, 2006.
[14] P. Andres Alonso, N. Martin-Cruz, and M. E. Romero-Merino, "The
governance of nonprofit organizations: Empirical evidence from
nongovernmental development organizations in Spain," Nonprofit and
Voluntary Sector Quarterly, vol. 35, pp. 588-604, 2006.
[15] M. Yetman, "Are donors mislead by low quality financial reports?," in
Working Paper, ed. University of California at Davis, 2008.
[16] R. J. Yetman and M. Yetman. (2004, The effects of governance on the
financial reporting quality of nonprofit organizations.
http://ssrn.com/abstract=590961.
[17] A. Christensen and R. Mohr, "Not-for-profit annual reports: What do
museum managers communicate?," Financial Accountability &
Management, vol. 19, pp. 139-158, 2003.
[18] E. Keating and P. Frumkin, "Reengineering nonprofit financial
accountability: Toward a more reliable foundation for regulation,"
Public Administration Review, vol. 63, pp. 1-14, 2003.
[19] S. Owusu-Ansah, "The impact of corporate attributes on the extent of
mandatory disclosure and reporting by listed companies in Zimbabwe,"
International Journal of Accounting vol. 33, pp. 605-631, 1998.
[20] B. Behn, D. DeVries, and J. Lin. Voluntary disclosure in nonprofit
organizations: An exploratory study [Online]. Available:
http://ssrn.com/abstract=727363
[21] L. M. Parsons, "Is accounting information from nonprofit organizations
useful to donors? A review of charitable giving and value-relevance,"
Journal of Accounting Literature, vol. 22, pp. 104-129, 2003.
[22] J. M. Trussel and L. M. Parsons, "Financial reporting factors affecting
donations to charitable organizations," Advances in Accounting, vol. 23,
pp. 263-285, 2008.
[23] C. Connolly and A. Dhanani, "Narrative reporting practices in United
Kingdom charities," Cardiff Business School2004.
[24] J. L. Callen, "Money donations, volunteering and organization
efficiency," The Journal of Productivity Analysis, vol. 5, pp. 215-228,
1994.
[25] J. L. Callen, A. Klein, and D. Tinkelman, "Board composition,
committees and organizational efficiency: The case of nonprofits,"
Nonprofit and Voluntary Sector Quarterly, vol. 32, pp. 493-520, 2003.
[26] L. E. DeAngelo, "Auditor Independence, 'Low Balling', and Disclosure
Regulation," Journal of Accounting & Economics, vol. 3, pp. 113-113,
1981.
[27] V. M. Iyer and A. L. Watkins, "Adoption of Sarbanes-Oxley measures
by nonprofit organizations: An empirical study," Accounting Horizons,
vol. 22, pp. 255-277, 2008.
[28] D. McMullen and K. Raghunandan, "Audit committees and financial
reporting problems," Journal of Accountancy, pp. 79-81, 1996.
[29] A. Pridgen and K. J. Wang, "The role of audit committees in nonprofit
organizations: An empirical investigation," presented at the American
Accounting Association Government and Nonprofit Section Midyear
Conference, Norwalk, Connecticut, 2007.
[30] G. D. Saxton and C. Guo, "Accountability online: Understanding the
web-based accountability practices of nonprofit organizations,"
Nonprofit and Voluntary Sector Quarterly, vol. 40, pp. 270-295, 2011.
[31] C. Connolly and N. Hyndman, "Performance reporting: A comparative
study of British and Irish chatities," The British Accounting Review, vol.
36, pp. 127-154, 2004.
[32] T. D. Calabrese, "Public mandates, market monitoring, and nonprofit
financial disclosures," Journal of Accounting and Public Policy, vol. 30,
pp. 71-88, 2011.
[33] S. Feigenbaum, "Competition and performance in the nonprofit sector:
The case of US medical research charities," The Journal of Industrial
Economics, vol. 35, 1987.
[34] E. A. Dyl, H. L. Frant, and C. A. Stephenson, "Governance and funds
allocation in United States medical research charities," Financial
Accountability & Management, vol. 16, pp. 335-352, 2000.
[35] D. H. Smith and C. Shen, "Factors characterizing the most effective
nonprofits managed by volunteers," Nonprofit Management and
Leadership, vol. 6, pp. 271-289, 1996.
[36] G. Chen, "Does meeting standards affect charitable giving? An empirical
study of New York metropolitan area charities," Nonprofit Managemant
and Leadership, vol. 19, pp. 349-365, 2009.
[37] V. E. Johnson, I. K. Khurana, and J. K. Reynolds, "Audit-firm tenure
and the quality of financial reports," Contemporary Accounting
Research, vol. 19, pp. 637-660, 2002.
[38] Z. Saunah, A. Ruhaya, and Y. Bee Wah, "Applying stakeholder
approach in developing charity disclosure index " Archives Des Sciences
Journal,, vol. 65, pp. 204-229, 2012.
[39] D. George and P. Mallery, SPSS/PC + Step by: A simple guide and
reference. Belmont, CA: Wadsworth, 1995.
[40] C. W. Chow and A. Wong-Boren, "Voluntary financial disclosure by
Mexican corporations," The Accounting Review, vol. July, pp. 533-541,
1987.
[41] B. G. Tabachnick and L. S. Fidell, Using multivariate statistics, 5th ed.
Boston: Pearson Education, 2007.
[42] W. E. Griffiths, R. C. Hill, and G. G. Judge, Learning and practising
econometrics: John Wiley & Sons, Inc., 1992.
[1] J. Jetty and V. Beattie, "RR108 - Disclosure practices and policies of UK
Charities," ACCA2009.
[2] N. Hyndman, "Charity accounting: An empirical study of the
information needs of contributors to UK fundraising charities,"
Financial Accountability & Management, vol. 6, pp. 295-307, 1990.
[3] N. Hyndman, "Contributors to charities - A comparison of their
information needs and the perceptions of such by the providers of
information," Financial Accountability & Management, vol. 7, pp. 69-
82, 1991.
[4] L. M. Parsons, "The impact of financial information and voluntary
disclosure on contributions to not-for-profit organizations," Behavioral
Research in Accounting, vol. 19, pp. 179-196, 2007.
[5] T. Gordon, M. Fisher, D. Malone, and G. Tower, "A comparative
empirical examination of extent of disclosure by private and public
colleges and universities in the United States," Journal of Accounting
and Public Policy, vol. 21, pp. 235-275, 2002.
[6] M. Fischer, T. P. Gordon, and M. A. Kraut, "Meeting user information
needs: The impact of major changes in FASB and GASB standards on
financial reporting by colleges and universities," in Journal of
Accounting and Public Policy vol. 29, ed, 2010, pp. 374-399.
[7] W. Banks and M. Nelson, "Financial disclosure by Ontario universities:
1988-1993," Journal of International Accounting, Auditing & Taxation,
vol. 3, pp. 287-305, 1994.
[8] A. Roshayani, O. Normah, A. R. Rashidah, S. Jamaliah, and M. Intan
Salwani, "Governance and financial reporting: An exploratory study of
disclosure practices by nonprofit organizations in Malaysia," in
Accounting Research and Education (AREC) Universiti Teknologi
MARA, Shah Alam, 2012.
[9] J. L. Gandia, "Internet disclosure by nonprofit organizations: Empirical
evidence of nongovernmental organizations for development in Spain,"
Nonprofit and Voluntary Sector Quarterly, vol. 40, pp. 57-78, 2011.
[10] P. M. Healy and K. G. Palepu, "Information asymmetry, corporate
disclosure and the capital markets: A review of the empirical disclosure
literature," Journal of Accounting and Economics, vol. 31, pp. 405-440,
2001.
[11] O. Kim and R. E. Verrecchia, "Market liquidity and volume around
earnings announcements," Journal of Accounting and Economics, vol.
17, pp. 41-68, 1994.
[12] J. Zhuang, G. D. Saxton, and H. Wu, "Publicity vs. impact in nonprofit
disclosures and donor preferences: A sequential game with one nonprofit
organization and N donors," Annals of Operations Research, Published
on-line: 21 September 2011.
[13] S. Buchheit and L. M. Parsons, "An experimental investigation of
accounting information's influence on the individual giving process,"
Journal of Accounting and Public Policy, vol. 25, pp. 666-686, 2006.
[14] P. Andres Alonso, N. Martin-Cruz, and M. E. Romero-Merino, "The
governance of nonprofit organizations: Empirical evidence from
nongovernmental development organizations in Spain," Nonprofit and
Voluntary Sector Quarterly, vol. 35, pp. 588-604, 2006.
[15] M. Yetman, "Are donors mislead by low quality financial reports?," in
Working Paper, ed. University of California at Davis, 2008.
[16] R. J. Yetman and M. Yetman. (2004, The effects of governance on the
financial reporting quality of nonprofit organizations.
http://ssrn.com/abstract=590961.
[17] A. Christensen and R. Mohr, "Not-for-profit annual reports: What do
museum managers communicate?," Financial Accountability &
Management, vol. 19, pp. 139-158, 2003.
[18] E. Keating and P. Frumkin, "Reengineering nonprofit financial
accountability: Toward a more reliable foundation for regulation,"
Public Administration Review, vol. 63, pp. 1-14, 2003.
[19] S. Owusu-Ansah, "The impact of corporate attributes on the extent of
mandatory disclosure and reporting by listed companies in Zimbabwe,"
International Journal of Accounting vol. 33, pp. 605-631, 1998.
[20] B. Behn, D. DeVries, and J. Lin. Voluntary disclosure in nonprofit
organizations: An exploratory study [Online]. Available:
http://ssrn.com/abstract=727363
[21] L. M. Parsons, "Is accounting information from nonprofit organizations
useful to donors? A review of charitable giving and value-relevance,"
Journal of Accounting Literature, vol. 22, pp. 104-129, 2003.
[22] J. M. Trussel and L. M. Parsons, "Financial reporting factors affecting
donations to charitable organizations," Advances in Accounting, vol. 23,
pp. 263-285, 2008.
[23] C. Connolly and A. Dhanani, "Narrative reporting practices in United
Kingdom charities," Cardiff Business School2004.
[24] J. L. Callen, "Money donations, volunteering and organization
efficiency," The Journal of Productivity Analysis, vol. 5, pp. 215-228,
1994.
[25] J. L. Callen, A. Klein, and D. Tinkelman, "Board composition,
committees and organizational efficiency: The case of nonprofits,"
Nonprofit and Voluntary Sector Quarterly, vol. 32, pp. 493-520, 2003.
[26] L. E. DeAngelo, "Auditor Independence, 'Low Balling', and Disclosure
Regulation," Journal of Accounting & Economics, vol. 3, pp. 113-113,
1981.
[27] V. M. Iyer and A. L. Watkins, "Adoption of Sarbanes-Oxley measures
by nonprofit organizations: An empirical study," Accounting Horizons,
vol. 22, pp. 255-277, 2008.
[28] D. McMullen and K. Raghunandan, "Audit committees and financial
reporting problems," Journal of Accountancy, pp. 79-81, 1996.
[29] A. Pridgen and K. J. Wang, "The role of audit committees in nonprofit
organizations: An empirical investigation," presented at the American
Accounting Association Government and Nonprofit Section Midyear
Conference, Norwalk, Connecticut, 2007.
[30] G. D. Saxton and C. Guo, "Accountability online: Understanding the
web-based accountability practices of nonprofit organizations,"
Nonprofit and Voluntary Sector Quarterly, vol. 40, pp. 270-295, 2011.
[31] C. Connolly and N. Hyndman, "Performance reporting: A comparative
study of British and Irish chatities," The British Accounting Review, vol.
36, pp. 127-154, 2004.
[32] T. D. Calabrese, "Public mandates, market monitoring, and nonprofit
financial disclosures," Journal of Accounting and Public Policy, vol. 30,
pp. 71-88, 2011.
[33] S. Feigenbaum, "Competition and performance in the nonprofit sector:
The case of US medical research charities," The Journal of Industrial
Economics, vol. 35, 1987.
[34] E. A. Dyl, H. L. Frant, and C. A. Stephenson, "Governance and funds
allocation in United States medical research charities," Financial
Accountability & Management, vol. 16, pp. 335-352, 2000.
[35] D. H. Smith and C. Shen, "Factors characterizing the most effective
nonprofits managed by volunteers," Nonprofit Management and
Leadership, vol. 6, pp. 271-289, 1996.
[36] G. Chen, "Does meeting standards affect charitable giving? An empirical
study of New York metropolitan area charities," Nonprofit Managemant
and Leadership, vol. 19, pp. 349-365, 2009.
[37] V. E. Johnson, I. K. Khurana, and J. K. Reynolds, "Audit-firm tenure
and the quality of financial reports," Contemporary Accounting
Research, vol. 19, pp. 637-660, 2002.
[38] Z. Saunah, A. Ruhaya, and Y. Bee Wah, "Applying stakeholder
approach in developing charity disclosure index " Archives Des Sciences
Journal,, vol. 65, pp. 204-229, 2012.
[39] D. George and P. Mallery, SPSS/PC + Step by: A simple guide and
reference. Belmont, CA: Wadsworth, 1995.
[40] C. W. Chow and A. Wong-Boren, "Voluntary financial disclosure by
Mexican corporations," The Accounting Review, vol. July, pp. 533-541,
1987.
[41] B. G. Tabachnick and L. S. Fidell, Using multivariate statistics, 5th ed.
Boston: Pearson Education, 2007.
[42] W. E. Griffiths, R. C. Hill, and G. G. Judge, Learning and practising
econometrics: John Wiley & Sons, Inc., 1992.
@article{"International Journal of Business, Human and Social Sciences:51408", author = "Ruhaya Atan and Saunah Zainon and Roland Yeow Theng Nam and Sharifah Aliman", title = "Analyzing Disclosure Practice of Religious Nonprofit Organizations using Partial Disclosure Index", abstract = "This study examines the relevance of disclosure
practices in improving the accountability and transparency of
religious nonprofit organizations (RNPOs). The assessment of
disclosure is based on the annual returns of RNPOs for the financial
year 2010. In order to quantify the information disclosed in the
annual returns, partial disclosure indexes of basic information (BI)
disclosure index, financial information (FI) disclosure index and
governance information (GI) disclosure index have been built which
takes into account the content of information items in the annual
returns. The empirical evidence obtained revealed low disclosure
practices among RNPOs in the sample. The multiple regression
results showed that the organizational attribute of the board size
appeared to be the most significant predictor for both partial index on
the extent of BI disclosure index, and FI disclosure index. On the
other hand, the extent of financial information disclosure is related to
the amount of donation received by RNPOs. On GI disclosure index,
the existence of an external audit appeared to be significant variable.
This study has contributed to the academic literature in providing
empirical evidence of the disclosure practices among RNPOs.", keywords = "disclosure, index, partial, NPOs, religious", volume = "6", number = "8", pages = "2008-7", }
