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The Effects of Financial Reporting Transparency and High-Quality Audit on Donations to Non-Profit Organizations: Evidence from Korean Charitable Organizations

재무보고의 투명성과 감사품질이 비영리법인의 기부금에 미치는 영향 : 한국자선단체로부터의 증거

Lee, Jong Eun;Choi, Ahnkyu
이종은;최안규

  • Received : 2018.11.14
  • Accepted : 2019.01.20
  • Published : 2019.01.28

Abstract

In this study, we investigate the effects of disclosure and high-quality audit on donations to charitable organizations in Korea. We find that the mandatory disclosure of financial information and high-quality audit is significantly and positively related to donations to charitable organizations. We also find that charitable organizations audited by Big 4 audit firms have greater likelihood to receive more donations, compared to those audited by non-Big 4 audit firms. Furthermore, we find that those positive associations are more pronounced for smaller charitable organizations. Collectively, those results imply that, as in the profit-making sector, disclosure and high-quality audit play a critical role in enhancing accountability and transparency of financial reporting and revenue for charitable organizations.

Keywords

mandatory disclosure;audit quality;non-profit organization;financial reporting transparency;donation

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Acknowledgement

Supported by : National Research Foundation of Korea