Financial Disclosure Management by Charitable Organisations: A Conceptual and Operational Framework

Abstract

We present a conceptual and operational framework for analysing financial disclosure management by charitable organisations. We paint an overall picture of the issue and apply various theories to explain this management practice. The framework lists the many motivations and contextual factors that impel managers of charitable organisations to manage financial information and explains how they weight and prioritise items in light of considerations such as incentive bonuses, social performance, resource dependence and monitoring mechanisms. The framework also sums up the strategies and techniques that undergird financial disclosure management and describes the monitoring mechanisms that mitigate this opportunistic practice and its consequences. The paper concludes by presenting several research avenues.

Editorial

“…(2023) find significant variations in benchmarks for audit materiality threshold disclosures, questioning whether the intended objective of increased transparency has been achieved. Identifying that charitable organisations are managed differently from profit‐making organisations, Cyr et al. (2023) present a framework for understanding the motivations, limitations and objectives that guide managers’ decision making. Han et al. (2023) model and estimate how new information is incorporated into prices in an uncertain environment. Xiao and Xi (2023) find an association between the tax avoidance aggressiveness of Chinese listed firms and their institutional cross‐ownership, suggesting that ownership may be a motivating factor.…”

“…3. Identifying that charitable organisations are managed differently from profit-making organisations, Cyr et al (2023) present a framework for understanding the motivations, limitations and objectives that guide managers' decision making. 4.…”