Pressure to Manage Ratios and Willingness to Do So: Evidence from Nonprofit Managers

NVSQ - Nonprofit and Voluntary Sector Quarterly, Forthcoming

34 Pages Posted: 14 Dec 2016

See all articles by Linda M. Parsons

Linda M. Parsons

University of Alabama - Culverhouse School of Accountancy

Charlotte Pryor

University of Southern Maine

Andrea Alston Roberts

University of Virginia - McIntire School of Commerce

Date Written: December 13, 2016

Abstract

We survey 200 nonprofit executives to investigate the pressure they experience to manage so-called efficiency ratios, and their reactions to that pressure. Specifically, we investigate whether managers’ perceptions of donor pressure are influenced by 1) the degree to which they rely on contributions and government grants, 2) the existence of restricted gifts, 3) oversight by monitoring institutions that may affect donor giving decisions, and 4) the sophistication of management. We then examine factors that affect the likelihood that managers will engage in ratio management. Interestingly, we find no evidence that nonprofits that rely more heavily on donor support feel greater donor pressure. Instead, we provide evidence that specific donors, such as those who make restricted gifts and government grantors, influence perceptions of pressure. Further, more sophisticated managers perceive less pressure to manage ratios. When facing pressure to manage ratios, monitors and sophisticated managers reduce the likelihood of ratio management.

Keywords: nonprofit, ratio management, earnings management, efficiency, sophistication

Suggested Citation

Parsons, Linda M. and Pryor, Charlotte and Alston Roberts, Andrea, Pressure to Manage Ratios and Willingness to Do So: Evidence from Nonprofit Managers (December 13, 2016). NVSQ - Nonprofit and Voluntary Sector Quarterly, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2885036

Linda M. Parsons (Contact Author)

University of Alabama - Culverhouse School of Accountancy ( email )

101 Paul W. Bryant Dr.
Box 870382
Tuscaloosa, AL 35487
United States

Charlotte Pryor

University of Southern Maine ( email )

P.O. Box 9300
Portland, ME 04104-9300
United States

Andrea Alston Roberts

University of Virginia - McIntire School of Commerce ( email )

P.O. Box 400173
Charlottesville, VA 22904-4173
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
61
Abstract Views
738
rank
432,778
PlumX Metrics