Properties of Accounting Earnings in Not-for-Profit Organizations

66 Pages Posted: 3 May 2014

See all articles by Charles A. Barragato

Charles A. Barragato

Stony Brook University

Sudipta Basu

Temple University - Department of Accounting

Date Written: January 29, 2007

Abstract

We examine the time-series properties of nonprofit earnings. We find that nonprofit accrual income measures display a slight mean reverting tendency and asymmetric persistence, similar to properties of business net income. Nonprofits’ operating cash flows have time-series properties similar to their accrual income, suggesting that operating accruals have little effect on these properties. Our results are robust to controls for size, debt and a matched comparison to for-profit firms in the same industries. Since financial accounting rules for nonprofit firms are almost identical to those of businesses, these differences suggest that accounting standards are not the sole determinants of income properties. By comparing financial accounting in nonprofit and business enterprises, we complement research comparing earnings properties of businesses within and across countries.

Keywords: Charities, Regulation, Financial Reporting

Suggested Citation

Barragato, Charles A. and Basu, Sudipta, Properties of Accounting Earnings in Not-for-Profit Organizations (January 29, 2007). Available at SSRN: https://ssrn.com/abstract=2428864 or http://dx.doi.org/10.2139/ssrn.2428864

Charles A. Barragato

Stony Brook University ( email )

303 Harriman Hall
Stony Brook, NY 11794
United States
631-632-7999 (Phone)
631-632-9412 (Fax)

Sudipta Basu (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States
215.204.0489 (Phone)
215.204.5587 (Fax)

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