Melbourne Accounting Research Seminar - Ms Elka Johansson
Ms Elka Johansson from Deakin University presented a MARS seminar.
Topic: The Influence of Proprietary Costs on Charities’ Reporting Practices and the Market for Contributions
Abstract: This study investigates whether proprietary costs influence the reporting of efficiency information by charities. In the NFP setting, the reporting of efficiency information, which is the relationship between inputs and outputs and charities, may have a perceived proprietary cost. Proprietary information is that which is disclosed publicly and used by competitors to the detriment of the disclosing entity (Dye, 1986). Charities can be categorised based on their activity group and we posit that the perceived proprietary costs of reporting are likely to be higher in more competitive activity groups (i.e., less concentrated groups). Using charitable company data collected from 832 annual reports and annual information statements lodged with regulators from 2008 to 2014, we find a positive association between industry concentration based on contributions and the reporting of efficiency information by charities. While we find that charities in more concentrated activity groups (based on donations) report more information, results show that charities in more concentrated activity groups (based on grants) report less information. Results also indicate that for charities operating in more concentrated activity groups (based on donations), the reporting of information is positively associated with the change in market share of donations for charities. Findings suggest that the perceived proprietary costs of disclosure negatively influence charities’ reporting decisions and the disclosure of proprietary information reduces charities’ market share of donations in competitive activity groups.