The Effect of Tuition Fee Constraints on Financial Management: Evidence from Korean Private Universities

Abstract

This study examined the effect of tuition fee control policy on universities’ financial management. Using data from 93 private universities in Korea from 2006 to 2015, we investigated the effect of tuition fees and government subsidies on labor cost, operating expenses, research expenses, and so on. Based on principal and agency theory, we used the analysis of average percentage change in expenditure and panel data analysis with the help of a Least Squares Dummy Variable (LSDV) model and polynomial regression. The results show that the increase rate of tuition fees decreased after 2011, with government subsidies increasing. The LSDV analysis indicates that universities increase labor costs, operating expenses, and student support fees, while there are no differences in research expenses, laboratory fees, and expenditures from investments and other assets. Polynomial regression reveals that, based on resources, universities behave differently in their spending. With these results, this study suggests a method to lessen information asymmetry and goal conflict, such as a performance-based research system and an incentive-based budget system in universities.

Research Institutes in Poland as an Element of the National Innovation System—Complexity, Financing and Effectiveness

“…The possibility of obtaining revenues from sources other than the budget subsidy also confirms the interest of business in the effects of R&D [18][19][20]. This is because these revenues effectively supplemented the sources of financing of the institutes' activities.…”

“…This is because, while closed innovations created and used at the level of individual entities are implemented commercially as part of private resources, open innovations are associated with the necessity of choosing sources of financing and rules of sharing [16,17]. The above-mentioned state and local government institutions most often use public funds and the effects of their activities are of the nature of social or public goods, which may raise controversies and doubts related to the legitimacy of such financing and its ultimate effectiveness and efficiency [18][19][20]. In response to such accusations, there are attempts to partially commercialize the activities of these institutions [21], aiming at tightening business relations and making the cooperation for the development of innovation, including support for open innovation, more effective.…”

Focused Coordination Models towards Sustainability in Higher Education. Case of Quevedo State Technical University (Ecuador)

“…The results obtained agree with Filho et al [57] that showed challenges seen in implementing sustainability leadership, i.e., a lack of interest by the university administration and among some members of the academic community. On the other hand, Lee et al [58] suggested a method to lessen information asymmetry and conflict of goals with leaders, such as a performance-based organizational system and an incentive-based budget system.…”

The Implementation of Basic Principles of Financial Management to Improve Higher Education Reputation

“…Tuition, taxpayer funding, and donations/grants provide revenues. Recently, however, the model has become increasingly challenged [11][12][13][14][15]. In the face of pressing financial and technology forces for change, not-for-profit higher education institutions need to move from long-successful financial and curriculum models to new models that fit the vastly different conditions of the 21 st century.…”

“…In the face of pressing financial and technology forces for change, not-for-profit higher education institutions need to move from long-successful financial and curriculum models to new models that fit the vastly different conditions of the 21 st century. Even among those most vested in the status quo, the expectation is that the future will be very different than today and will arrive soon [11][12][13][14][15]. The use of funds at a private university must be well managed and reports on its use must be prepared so that it can be verified and audited by internal and external parties.…”