The Cost of Financial Misconduct in Non-Profits

72 Pages Posted: 22 Feb 2021

See all articles by Artem Joukov

Artem Joukov

The University of Southern California

Date Written: January 26, 2021

Abstract

I explore the impact of financial crime on non-profit fundamentals, showing that service revenue and employee compensation, the largest sources of non-profit revenue and expenditures, fall in the years following financial misconduct and its disclosure. However, I observe no declines in volunteerism or employment after financial crime. These results do not align well with the reputational damage hypothesis proposed by prior scholarship. Assuming a competitive free market for services and labor, my findings suggest that afflicted non-profits may experience declines as a result of either operational disruptions that follow the discovery and disclosure of crime or some other non-reputational consequences.

Keywords: Non-Profits; Financial Crime; Compensation; Revenue

JEL Classification: J3, G3, E3

Suggested Citation

Joukov, Artem, The Cost of Financial Misconduct in Non-Profits (January 26, 2021). Available at SSRN: https://ssrn.com/abstract=3773763 or http://dx.doi.org/10.2139/ssrn.3773763

Artem Joukov (Contact Author)

The University of Southern California ( email )

2250 Alcazar Street
Los Angeles, CA 90089
United States
251-223-2702 (Phone)

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