Public mandates, market monitoring, and nonprofit financial disclosures

Research output: Contribution to journalArticlepeer-review


Public officials have recently sought increased regulation of financial disclosures from not-for-profit organizations as a means of improving accountability with the public. One objective of this study is to examine whether not-for-profit entities already subject to audit requirements submit financial reports in compliance with GAAP. Further, since the majority of not-for-profit organizations are not subject to public audit mandates, this study also ascertains whether other market actors such as donors monitor and demand accrual-based financial information. The empirical analyses indicate that not-for-profit organizations subject to public audit mandates are largely in compliance with GAAP, although a significant minority of organizations subject to state requirements is not; further analyses suggest that external oversight significantly influence the use of accrual reporting. Models are also tested on a subsample of not-for-profits that switched from cash to accrual reporting, with the results suggesting that increasing public and market oversight have a significant effect on the decision to switch methods. The overall results suggest that public and market actors demand accrual-based financial reporting from not-for-profit organizations.

Original languageEnglish (US)
Pages (from-to)71-88
Number of pages18
JournalJournal of Accounting and Public Policy
Issue number1
StatePublished - Jan 2011

ASJC Scopus subject areas

  • Accounting
  • Sociology and Political Science


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