The Economic Consequences of Financial Audit Regulation in the Charitable Sector

• 成果类型: Article
• 署名作者: Duguay, Raphael
• 署名单位: Yale University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12417
• 发表日期: 2022
• 页码: 1463-1498
• 关键词: CORPORATE SCANDALS; NONPROFIT SECTOR; Agency problems; IMPACT; MARKET; disclosure; management; COSTS; COMPETITION; OWNERSHIP

摘要

I provide evidence on the effects of financial audit mandates in the charitable sector, in particular their influence on donor behavior. My empirical strategy relies on variation in size-based exemption thresholds across states and differences in size driven by the nature of charities' activities. Consistent with audit mandates reducing donors' reliance on charity reputation, I find audit mandates are associated with a lower concentration of donations on the largest, most well-known charities. I show this reallocation of resources allows the charitable sector to serve more diverse geographic areas and social needs. In terms of the effect on willingness to give, I document that audit mandates are associated with a higher proportion of taxpayers who donate. However, I only observe a sizable impact on total contributions in dollars for charities with high inherent information asymmetry. Collectively, these results suggest financial audit regulation reduces information frictions and thereby affects resource allocation in the market for charitable giving.