Nonprofit classification decisions in response to a change in accounting rules

Leslie Eldenburg, Cynthia C. Vines

Research output: Contribution to journalArticle

19 Scopus citations

Abstract

This study analyzes the response of nonprofit managers to a change in accounting regulation. A 1990 change in hospital accounting rules disclosed new information about bad debt and charity care expenses. This change provided managers with incentives to reclassify some bad-debt expense to charity care. Using univariate and multivariate analyses, we find that nonprofit managers respond to their current cash position when making classification decisions to disclose bad-debt expense and charity care amounts. While we expected that charity care levels would influence these managers differentially, cash levels appear to be more important in their disclosure decision making.

Original languageEnglish (US)
Pages (from-to)1-22
Number of pages22
JournalJournal of Accounting and Public Policy
Volume23
Issue number1
DOIs
StatePublished - Jan 1 2004

Keywords

  • Bad debt
  • Charity care
  • Financial ratios
  • Nonprofit hospitals
  • Reclassification

ASJC Scopus subject areas

  • Accounting
  • Sociology and Political Science

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